Dataram Corp. (NASDAQ: DRAM) has watched its shares fall over the course of Tuesday following the announcement of an acquisition. The company recently announced that it has entered into a definitive agreement to acquire all of the outstanding shares of US Gold Corp and USGC subsidiaries. The net present value of US Gold Corp.’s assets is estimated around $160 million.
The transaction is subject to customary closing conditions as well as regulatory approval and Dataram stockholder approval. It is expected to close by the end of fiscal second quarter of 2017.
Under the agreement, Dataram will acquire USGC and its subsidiaries, subject to certain terms and conditions. Consideration for the acquisition consists of Dataram common and preferred shares.
Dave Moylan, Dataram’s chairman and CEO, commented:
This is a tremendous opportunity for our stockholders. We have been actively looking for diversification opportunities for more than a year and our entry into the natural resources sector is intended to diversify risks and unlock value for our stockholders. Our executive management team sees this acquisition as an economically viable and exciting project given the overall landscape and market opportunity within natural resources. While the global memory business is continuing to experience significant average selling price declines and strong margin pressure, we have refocused the core business to operate in this environment. After the acquisition concludes, Dataram will consider all options to maximize its memory products and performance solutions business in the best interest of the pre-acquisition stockholders. We further believe the acquisition of US Gold will generate strong capital appreciation.
Edward Karr, CEO and director of U.S. Gold Corp., added:
On an industry analysis, we are seeing gold equities rebounding in 2016. U.S. Gold has a top quality management and advisory team and owns the Copper King property, which has a prior completed Preliminary Economic Assessment (PEA) by Mine Development Associates (MDA) showing measured, indicated, and inferred resources of 1.1 million oz. of gold and 285 million lbs. of copper. The PEA was completed in 2012 at a lower gold price and shows a Net Present Value (NPV) of Copper King of $160 million at $1,100 gold. We are excited to move forward on advancing our development and exploration project.
So far in 2016, Dataram has outperformed the market, with the stock up over 100% (prior to Tuesday’s move). However, over the past 52 weeks the stock is down 36%.
Shares of Dataram were last trading down 30% at $0.98, with a 52-week trading range of $0.53 to $2.20.
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