Alkane to merge with Canadian gold miner Mandalay

The news: Gold miner Alkane Resources has announced a merger with Canadian rival Mandalay Resources in a potential $1 billion deal to build scale amid rising bullion prices.

The numbers: Under the deal, Perth-based Alkane will make a $560 million offer for Mandalay’s business via a scrip-based transaction, issuing 7.875 shares for each share held in Mandalay and implying a value of 73.20 cents each. Alkane shareholders will have a 45% stake in the combined company, which will have a market capitalisation of $1 billion and a secondary listing on the Toronto stock exchange.

Alkane shares last closed at 75 cents each.

The context: Alkane said the deal will give the merged entity ownership of three cash-generating mines, which include Alkane’s Tomingley mine in New South Wales and Mandalay’s Costerfield mine in Victoria along with its Björkdal mine in Sweden. Other projects include Alkane’s Boda-Kaiser copper-gold project in NSW and Mandalay’s True Blue project in Victoria.

The merged entity will have projected gold equivalent production of 160,000 ounces in 2025 and 180,000 ounces in 2026, along with a proforma cash balance of $188 million as at 31 March.