Transcription of The Stock Network Interview with Starpharma Far East Gold (ASX:FEG), Managing Director & CEO Shane Menere
Lel Smits: Far East Gold is entering a pivotal period as it advances the flagship Eidenberg Gold project in Papua province, Indonesia, while simultaneously responding to an unsolicited takeover offer from Shangier Gold. The company has advanced the Eidenberg Gold project over the past year, growing the resource and progressing studies and permitting as it moves toward development. At the same time, the board has unanimously recommended that shareholders reject Shangier Gold’s takeover offer, arguing that it does not reflect the company’s value or future growth potential.
I’m joined today by Far East Gold Managing Director and CEO Shane Menneray to discuss the company’s development strategy, the rationale behind the board’s position on the takeover offer, and the key catalysts investors should be watching in the months ahead. Shane, welcome back to the Stock Network.
Shane Menere: Thanks, though. It’s really good to be here.
Lel Smits: Now, the board has unanimously recommended shareholders reject the offer that you have received. Can you outline for us the key reasons behind that decision? Also, why you believe the current offer materially undervalues Far East Gold?
Shane Menere: Sure. I’d encourage shareholders to focus on the facts. An independent expert has concluded that the offer is not fair and reasonable, to use their words. The company is materially stronger today than it was when the offer was announced.
We hold now a majority interest in our flagship project and we have a clear development pathway, which we’ve expressed out there to the market, multiple near-term value catalysts ahead of us and growing international strategic interest for our assets. Ultimately, this isn’t about defending the company against one particular bidder. It’s about ensuring every shareholder has the opportunity to realise fair value for a significantly stronger opportunity.
The board has described Far East Gold as entering a very different phase of its evolution. Can you explain for us what has changed? Also, why you believe the company is significantly stronger today than when the offer was first announced? I think that’s a very important point. Today, we’re talking about a fundamentally stronger company.
The biggest milestone has been completing that stage one of the 51%. Beyond that, the scoping study is well advanced and we’re progressing along that Indonesian feasibility study pathway. Permitting continues to advance and development drilling is planned.
Collectively, these milestones represent Far East Gold’s transitioning from that exploration into the development company. That’s an important transition because historically, companies have successfully moved along that pathway to create significant value for shareholders. The independent expert has reinforced that position by the board.
That assessment was coming in at $0.325 to $0.445 per share compared with that current offer of $0.13.
Lel Smits: Shane, looking ahead, what are those major catalysts that shareholders should be watching over the coming months? Why do you think those milestones are so important for the company’s future?
Shane Menere: There are several. Completion of that Idenberg scoping study and, as I said, the progression of the feasibility study pathway and all the other work that we’re doing. Those further permitting milestones that are getting achieved.
Each one of these further de-risks the project and moves us closer to development. The board believes shareholders should have the opportunity to participate in those value catalysts because they represent the next stage of value creation for the company.
Lel Smits: Also, the target statement refers to increasing strategic interest from international mining companies, strategic investors and financial groups. What does that tell you about the quality of Far East Gold’s assets? Also, the opportunities ahead for shareholders?
Shane Menere: I think that’s another important point. As discussed and disclosed in that target statement, since the offer was announced, Far East Gold has attracted that interest from a range of international mining companies and strategic investors and financial groups, as you mentioned. Multiple parties now have entered confidentiality agreements with the company and are actively progressing those technical, commercial and site-based due diligence activities.
Importantly, that independent expert specifically referred to the strategic interest as one of the factors supporting its conclusion with the current offer is not reasonable. To us, that demonstrates that experienced industry partners recognise the quality of the company’s assets in the portfolio and the opportunities that exist as we continue advancing towards development.
Lel Smits: Yes. Finally, Shane, how does the board discuss with strategic investors, including Cheng Yeh, while also ensuring the absolute best outcome for shareholders?
Shane Menere: Our approach is actually very straightforward. Cheng Yeh has been a valued strategic shareholder for around 18 months and we’ve appreciated their support during that period. This isn’t about one shareholder, it’s about every shareholder.
So the board has fiduciary responsibility to objectively assess every proposal based on the value of the company today and that principle applies equally to Cheng Yeh and to every other strategic and financial party that may have an interest in Furris Gold. So we remain open to engaging constructively with all credible partners who recognise the value that’s been created and who wish to participate in the company’s future.
Lel Smits: So Shane, in terms of the long-term opportunity, what would you like shareholders to keep in mind as they’re considering the board’s recommendation and the future of Furris Gold? I’d encourage shareholders to focus on the facts.
An independent expert has included that the current offer is not fair and reasonable and the company is materially stronger today than it was when the offer was announced. We now hold a major interest in our flagship project and we have a development pathway and those multiple near-term catalysts which I’ve mentioned. So ahead of us, that growing international strategic interest in our assets is really quite positive.
So ultimately, this isn’t about defending the company against one particular bidder, it’s really about ensuring every shareholder has the opportunity to realise their value of what’s become a significantly stronger company. So the independent board committee does not believe that the value is reflected in the current offer and our responsibility is really quite clear. And we will continue executing strategy and continue advancing our projects and continue creating value and remain open to any proposal that appropriately recognises the quality of Furris Gold’s assets and the future they represent. And that’s exactly what we intend to do.
Lel Smits: Shane, I appreciate the update from Furris Gold.
Shane Menere: Thank you, Lel, appreciate the opportunity.
Ends