Photo by: Reuters
PERTH (miningweekly.com) – Juniors Excelsior Gold and Spitfire Materials have struck a court-approved merger agreement to create a gold company with a diversified portfolio of exploration and development assets.
The merger will be implemented through a scheme of arrangement, with Spitfire to acquire all of the issued capital of Excelsior by issuing one new Spitfire share for every 2.208 Excelsior shares held. The transaction valued Excelsior shares at 4.43c a share based on the 30-day volume-weighted average price of Spitfire shares.
Following the merger, Spitfire shareholders will hold a 58.3% share of the merged entity, with Excelsior shareholders holding the remainder.
The merged entity will have a combined indicated and inferred mineral resource of more than 2.1-million ounces, providing it with the critical mass to accelerate development plans to become a midtier gold producer.
The two companies were planning an immediate prefeasibility study on the combined Aphrodite and Kalgoorlie North gold projects, following the merger.
“This is a game-changing transaction for both companies which will result in the creation of a diversified Australian gold developer with a strong pipeline of development and growth assets in the North Kalgoorlie region and a clear pathway to production,” said Spitfire MD John Young.
“The merged entity will have the scale, relevance, access to capital and management capability to build a significant new midtier Australian gold producer.”
Young said that the combination of the two companies’ respective Western Australian gold assets gave the merged entity the critical mass to pursue a near-term development strategy based on the establishment of a new production hub in Kalgoorlie.
“The large resource inventory at Aphrodite has exceptional exploration upside and growth potential, and offers significant synergies with our emerging high-grade discovery at Mulwarrie,” he added.
Young also noted that the transaction was consistent with the company’s strategy to create value for shareholders through aggressive exploration and value-accretive strategic acquisitions in high-quality mineral provinces, providing the company with a fast-tracked pathway to create a significant midtier gold company.
The merged entity will have Young at the helm as MD, with current Excelsior MD Rowan Johnston appointed as executive director. Neil Biddle will also be appointed as executive director of the merged entity.
The transaction will be subject to a number of conditions, including shareholder and regulatory approvals, and an independent expert finding that the transaction was in the best interest of shareholders.
The scheme will likely be implemented before the end of September this year.