Silver Lake shares tumble following Red 5 merger
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More news: Shares in Silver Lake Resources dropped by more than 12.5% after the company announced its merger agreement with fellow gold miner Red 5. Having seen its shares slide more than 4% during early trading, Red 5 was up 3% by early afternoon.
Gold producers Silver Lake and Red 5 announce merger
The news: Gold miners Silver Lake Resources and Red 5 Limited have announced a merger in an agreement that will see Red 5 buy 100% of Silver Lake shares.
The numbers: The merger of equals will create a diversified mid-tier gold miner, estimated to produce 445,000 ounces per year. Silver Lake shareholders will receive 3.434 Red 5 shares for every Silver Lake share held, while Red 5 shareholders will be the majority owners of the merged entity with a 51.7% stake. Red 5 shares dropped over 4% in early trading, with Silver Lake down more than 10%.
The context: As part of a deal unanimously recommended by both company boards, current Silver Lake managing director Luke Tonkin will become CEO of the merged company, with Red 5's Russell Clark as chair. The board will comprise four directors from each of the current company boards.
Red 5 managing director and CEO Mark Williams, who has led the firm for a decade, and CFO David Coyne will cease employment once the merger is completed. Coyne has been in the role for six months.
The merger is expected to be completed by June 2024.
The source: ASX announcement
