Brightstar Resources merges with Kingwest Resources on the doorstep of WA’s Leonora’s district

The strategic alliance of gold assets owned by Brighstar and Kingwest creates a company of scale in the Leonora-Laverton district which is undergoing consolidation by Genesis Minerals.

Brightstar Resources (ASX:BTR) and Kingwest Resources (ASX:KWR) have agreed to a merger via a Kingwest Scheme of Arrangement, under which Brightstar will acquire 100% of the shares in Kingwest.

KWR shareholders will receive one Brightstar share for every 0.44 Kingwest shares held on the scheme record date with shareholders of both entities set to maintain 57pc (Brightstar)and 43pc (Kingwest), respectively, of the issued ordinary shares in the newly Merged Group.

According to BTR managing director Bill Hobba, the merger will combine two complimentary West Australian gold companies, leveraging Brightstar’s infrastructure (currently on care and maintenance) to unlock the development potential of the Menzies Gold Project.

Larger, more diverse gold play

“This is a transformational transaction for Brightstar and marks a refreshed direction for the company,” he says.

“It creates a larger, diverse junior gold play and means Brightstar can now start to assess development options utilising a larger resource base and our significant existing infrastructure.”

Benefits to both sets of shareholders

Both companies believe the deal will see an immediate increase in the potential value of Kingwest and Brightstar’s resources, particularly the near surface high grade mineralisation at KWR’s Menzies Gold Project.

Access to the Laverton processing plant gives way to a potentially low capex development opportunity and likely higher margins than toll treatment/third party processing options for Menzies ore, as well as the ability to blend with base load from Brightstar’s Laverton resources.

It also accelerates the transition from explorer to developer whilst retaining meaningful exposure to ongoing exploration.

Executive and management changes

Bill Hobba will retire from the board of Brightstar, and Canaccord corporate executive, Alex Rovira will be appointed managing director of the company in mid-January 2023.

Rovira – the son of highly credentialed geologist Tony Rovira who discovered the Cosmos Nickel deposit when he was exploration manager at Jubilee, has been working as an investment banker at a global financial services company for the past nine years.

Dean Vallve, the recently appointed chief operating officer (COO) of Kingwest, is proposed to be appointed COO of the Merged Group following Scheme implementation and brings a strong technical skill set and operating experience to the Merged Group.

It is intended that the Merged Group’s board will have six members comprising:

Brightstar Directors – Alex Rovira, Yongji Duan and Joshua Hunt
Kingwest Directors – Greg Bittar, Ashok Parekh and Jonathon Downes

What’s next?

The Scheme is unanimously recommended by the board of Kingwest and each director of Kingwest intends to vote all Kingwest shares they control in favour of the Scheme.

Upon implementation the Merged Group will have approximately 1,472.9 million ordinary shares outstanding5 and continue to trade as Brightstar Resources Limited under the ticker BTR:ASX.

Extensional drilling at Brightstar’s CTW orebody highlights untapped potential

Meanwhile, recent gold assays such as 6m at 3.17 g/t gold from 182m has extended the known shoot size of the Zone-1 shoot to roughly 400m along strike and 100m below previous drill holes.

Hobba says exploration continues to validate BTR’s expectations of the area while further growth of the CTW orebody will remain a priority in 2023 both down plunge at Zone-1 and along strike to the north.

Further drilling will be required before an accurate shape of the extended shoot can be determined and orientation characteristics can be used for further exploration.

This article was developed in collaboration with Brightstar Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.