PERTH (miningweekly.com) – Joint venture (JV) partners Pantoro and Tulla Resources on Monday announced a merger under which Pantoro would acquire Tulla to gain full ownership of the Norseman gold project, in Western Australia, and create a new mid-cap ASX-listed gold company.

The merged entity would have a targeted production of 110 000 oz/y and a mineral resource of 4.79-million ounces, along with an ore reserve of 0.98-million ounces.

“Consolidating the Norseman gold project into a single entity is a logical step for all parties to maximise value as the project ramps up to reach its full potential as a premier gold asset in Western Australia,” said Pantoro MD Paul Cmrlec.

“While Norseman has experienced delays and challenges in its ramp-up, key operational and management changes made late in 2022 are now yielding positive results, with productivity and throughput increasing month on month and process plant ramp-up now virtually complete to nameplate capacity.”

Under the proposed merger, Tulla shareholders will receive 4.96 Pantoro shares for every Tulla share held, implying a 24.7% premium to the company’s last closing price. The merger would see Pantoro shareholders holding a 51.5% interest in the merged entity, with Tulla shareholders holding the remaining 48.5%.

Following the merger, Pantoro’s board would consist of seven directors, including an independent chairperson and three directors each from Tulla and Pantoro. Cmrlec would continue as MD, while Tulla executive chairperson and executive director Mark Maloney will be appointed as a nonexecutive director.

Both the Tulla and Pantoro boards have unanimously recommended that shareholders accept the offer in the absence of a superior proposal.

“Consolidating ownership of the Norseman gold asset and battery metals will deliver significant value for the shareholders of both companies, providing a simplified structure and delivering operational and corporate efficiencies,” Maloney said on Monday.

“Tulla shareholders will realise the upside of their investment in a significant midtier Australian gold producer, with a large, high-grade operation of very substantial value while maintaining 100% ownership of the industrial mineral rights at Norseman.”

Norseman poured its first gold in October of last year. A 2020 study estimated that the project could produce 108 000 oz/y of gold over a seven-year mine life.

In addition to the merger agreement, Pantoro on Monday also announced plans to raise A$75-million in a share placement, in part to fund development costs at Norseman.

The company would issue 1.25-billion shares in a two-tranche placement, priced at 0.6c a share, representing a 31.8% discount to Pantoro’s last trading price on February 10, and a 32.8% discount to the company’s five day volume weighted average share price.

The first tranche of more than 266.8-million shares will be issued under Pantoro’s placement capacity, while the second tranche would be subject to shareholder approval at a meeting scheduled for March 24.

Pantoro told shareholders that A$45-million of the placement proceeds will be deposited into the Norsman JV account for project development and working capital, with the company using these funds to provide all of the net capital contributions for both Pantoro and Tulla.

If the merger does not proceed, Pantoro would use A$22.5-million of the placement funds for its share of project development and working capital at Norseman, with funds also going towards repaying existing financing facilities and to fund working capital.

“The equity raising ensures that the combined group is well funded through the initial phases of production and enables the reduction of the consolidated debt position of the Company during this critical phase,’ said Cmrlec.