Junior gold explorers Spitfire Materials and Excelsior Gold, which own neighbouring projects north of Kalgoorlie, have agreed to a merger, with the new entity worth about $80 million.
Junior gold explorers Spitfire Materials and Excelsior Gold, which own neighbouring projects north of Kalgoorlie, have agreed to a merger, with the new entity worth about $80 million.
Under the deal, Spitfire has agreed to acquire Excelsior by issuing one share for every 2.208 Excelsior shares.
Following completion of the deal, Spitfire shareholders will hold 58.3 per cent of the new entity, while Excelsior will take a 41.7 per cent stake.
The transaction values Excelsior at about 4.43 cents per share, based on Spitfire’s 30-day volume-weighted average price.
The merged entity’s portfolio will include Spitfire’s Aphrodite project and Excelsior’s Kalgoorlie North project, which have a combined indicated and inferred mineral resource of more than 2.1 million ounces of gold.
The new company is planning to undertake a pre-feasibility study for the combined projects following completion of the deal.
The merged entity will be led by Spitfire managing director John Young, while Neil Biddle will become an executive director.
Mr Biddle and Mr Young founded lithium miner Pilbara Minerals together.
Excelsior managing director Rowan Johnston will become an executive director of the new company.
Post-merger, the board of the company will include three members from each of the current Spitfire and Excelsior boards.
Mr Young said the transaction was consistent with the company’s strategy.
“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,” he said.
“The merged entity will have the scale, relevance, access to capital and management capability to build a significant new mid-tier Australian gold producer.
“The combination of our respective Western Australian gold assets gives us the critical mass to pursue a near-term development strategy based on the establishment of a new production hub near the world-class mining centre of Kalgoorlie.”
Mr Johnston said the deal was a win for both companies.
“There is no doubling up of management or board skills, the two companies will blend seamlessly into one, and the leases adjoin each other – which means no duplication of infrastructure or site personnel,” he said.
“So, essentially this merger will result in one project, one office and one board with over 2.1 million ounces in resource and the critical mass to potentially generate a meaningful production profile.
“By achieving the critical mass and scale to support production, the merged entity will be in a great position to deliver superior returns to our shareholders, with a clear growth pipeline through exploration success and/or future M&A opportunities.”
Shares in Spitfire were up 2.25 per cent at 9.1 cents each at 2pm AEDT, while Excelsior shares had risen 5 per cent at 4.2 cents each.
