Two WA based gold miners have just announced they’re planning to merge.
Red 5 will buy 100 per cent of Silver Lake Resources shares (don’t let the name confuse you).
Silver Lake shareholders will receive 3.434 Red 5 shares for every Silver Lake share they hold.
It’ll create a company with a market capitalisation of $2.2billion.
The deal, entered into under a binding Scheme Implementation Deed, will see Red 5 own 51.7 per cent of the merged entity.
Silver Lake shareholders will own the remaining 48.3 per cent.
Red 5 chairman Russell Clark will continue as chair of the new business, while the managing director of Silver Lake, Luke Tonkin, will be the MD and CEO of the merged entity.
The deal will create a company with a combined gold production profile of 445koz for the 2024 financial year,with 4 million ounces of ore reserve.
The new company has four gold mining hubs in Western Australia’s goldfields region and Canada.
Luke Tonkin, managing director of Silver Lake said the transaction represents a highly complementary combination of assets and balance sheets.
“Mergers work when each company brings attributes that the other company does not possess, which is undoubtedly the case here. The increased scale, diversification and financial strength of the new company that will be formed via this transaction will be primed for continued strong cash flow generation and further growth.”
Mark Williams, managing director of Red 5 added it’s a ‘logical merger of two mid-tier miners’.
“It represents an exciting inflection point for Red 5 shareholders following the successful development, ramp-up and achieving steady state production at King of the Hills. With a sector leading balance sheet, the merged entity provides a strong foundation for future growth.”
The merger is subject to shareholder and regulatory approval. If it all goes ahead, the deal will be implemented in June.
(Between you and me – analysts expect a lot more merger and acquisition activity to take place this year.)
