PERTH (miningweekly.com) – ASX-listed gold miner Southern Cross Goldfields and fellow-listed Polymetals Mining on Monday announced a merger to create a diversified Australian gold company.

Under the merger agreement, Southern Cross was offering 11 of its own shares for every one Polymetals share held, with Southern Cross shareholders collectively holding a 47% interest in the merged company and Polymetals shareholders collectively holding the remaining 53%.

The companies said in a joint statement on Monday that the merged entity would be a dynamic Australian gold company with the potential to join the ranks of midtier producers within the near future.

The merged entity would have a mineral resource inventory of some 1.69-million ounces, a combined pro forma market capitalisation of around A$30-million, and a cash balance of A$13-million.

Polymetals chairperson David Sproule told shareholders the merger transaction represented a tremendous opportunity for the two emerging gold companies to be proactive in the current environment and remain in control of their own destinies.

“This merger provides a truly complementary blend of assets, cash and skill sets that will create a new Australian gold company with genuine investor relevance.”

Sproule noted that the merger would create a clear pathway for shareholders in each company to realise value from an accelerated timetable for the Marda and Mount Boppy assets.

“I believe both companies share a similar culture of executing projects quickly and efficiently and Polymetals has a proven track record in doing this. I strongly believe that this combination will create an excellent platform for growth,” he added.

Besides the Marda and Mount Boppy assets, the merged entity’s development pipeline would also incorporate the Turner River gold and base metals joint venture, in Western Australia, and a prospective tenement portfolio in the Yilgarn and Lachlan Fold belts.

Southern Cross chairperson Samantha Tough said the company’s shareholders would benefit from exposure to Polymetals’ near-production assets on the East Coast of Australia, as well as the skills and expertise of the management team in developing efficient gold operations.

“The combined group will have a strong balance sheet and the ability to fast-track the development of its key assets, while also funding aggressive exploration programmes,” she said.

The merger was subject to a number of conditions, including regulatory and shareholder approval.