PERTH (miningweekly.com) – Gold miners Doray Minerals and Silver Lake Resources on Wednesday announced a merger to combine the two Western Australian gold companies.

Under the terms of a scheme implementation deed, Doray shareholders will receive 0.6772 Silver Lake shares for every Doray share held, with Silver Lake shareholders holding a 62.7% interest in the combined company, and Doray shareholders a 37.3% share.

“This is a compelling transaction for Doray and provides the financial strength to fully unlock the value of Deflector,” said Doray MD Leigh Junk on Wednesday.

“Both companies have recognised the challenges of being a significant producer in the gold business and this transaction puts us in a position to not only compete, but to be a sustainable and relevant player in the global gold industry.”

Junk said that the company had taken great care to find a partner with aligned growth ambitions and a strong operating culture, with Silver Lake fitting the bill.

The Doray board of directors have unanimously recommended that shareholders vote in favour of the merger, in the absence of a superior proposal and subject to an independent expert finding that it was in the best interest of shareholders.

The merger will combine two high-grade gold operations, and will create a midtier company with a 2019 pro-forma production guidance of some 240 000 oz. The merged group will have a mineral resource base of 4.6-million ounces, with both the Deflector and Mount Monger operations offering a pipeline of in-mine and near-mine brownfield exploration targets.

Silver Lake MD Luke Tonkin noted that the company’s operating strategy has increased the value of its Mount Monger gold camp through a successful exploration and investment programme over the past four years.

“The demonstrable success of this strategy has created a strong cash-generating business with a strong balance sheet allowing the business to grow both organically and inorganically.

“The combination of the complementary Silver Lake and Doray assets is being done for the right reasons at the right time, and creates a stronger company in a low-risk jurisdiction with financial strength and further growth opportunities.”

The two companies are aiming to have the merger finalised by March 2019.