Karora agrees Westgold merger days after Ramelius talks end
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The news: Canadian gold miner Karora Resources has agreed to a merger with Perth-based Westgold Resources, days after ending talks with its ASX rival Ramelius Resources.
The numbers: Westgold said it will acquire 100% of Karora shares, at a price of 2.524 Westgold shares and 68 cents cash per Karora share. Karora shareholders will also receive 0.3 of a share in a new company, SpinCo, that will be de-merged from Karora and hold the company's existing 22.1% interest in lithium play Kali Metals.
The offer represents a 10.1% premium to Karora's last closing share price on the Toronto Stock Exchange (TSX) of $5.995 and an 18.9% premium on Karora's 20-day volume weighed average price on the TSX of $5.552.
Upon completion of the deal, Westgold shareholders will own 50.1% of the merged company, while former Karora shareholders will own 49.9%.
Westgold said the combined entity will have a market capitalisation of approximately $2.2 billion, and intends to apply for quotation of its Westgold shares on the TSX.
Westgold shares were trading 3% higher at $2.35 by 10:45am AEDT.
The context: The merger announcement comes a few days after Westgold's rival Ramelius ended discussions with Karora without a deal.
The acquisition will see Westgold add Karora’s WA-based mines Beta Hunt, Higginsville and Lakewood Mill to its operations, as it targets a portfolio capable of producing more than 400,000 ounces of gold per year.
The source: ASX announcement
