Gold industry consolidation continues with Dacian Gold takeover of NTM Gold
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Shareholders of both companies will benefit from NTM Gold’s Redcliffe gold project near Leonora in WA’s Eastern Goldfields region and Dacian Gold’s Mt Morgans operation being integrated into a single company.
Dacian Gold has processing infrastructure at its Mt Morgan gold operation near Laverton in WA, enabling it to unlock value in NTM Gold’s Redcliffe project.
“The merger will create value by delivering on our strategy of extending mine life, diversifying our production base and increasing operational flexibility at Mt Morgans,” Dacian Gold managing director, Leigh Junk, said.
Junk added the merger was a logical step for Dacian Gold to expand its operations and unlock resources within haulage distance of its substantial processing infrastructure.
Junk will stay as managing director of the new company that will be led by Dacian Gold’s chairman, Ian Cochrane, and NTM Gold director Eduard Eshuys joins its board of directors as a non-executive director.
NTM Gold managing director, Andrew Muir, said the proposed deal was a “compelling transaction” for the company.
This because it provides the financial, processing, and operating strength to unlock value in its Redcliffe gold project.
“The transaction is an outstanding opportunity for NTM given the proximity of both companies’ assets and delivers to NTM shareholders immediate exposure to gold production while still enabling them to benefit from future exploration success at both Redcliffe and Mt Morgans,” said Muir.
The Redcliffe project has an estimated mineral resource of 537,860 ounces of gold and lies within a 100km radius of Dacian Gold’s Mt Morgans gold mine.
Redcliffe will provide the new merged company with a second mining centre, diversifying its production and reducing its operational risk.
Significant mine life extensions at Mt Morgans could realise the full potential of the combined group’s mineral resource base of 45.4 million tonnes at 1.88 grams per tonne for 2.75 million ounces of gold.
Mergers and acquisitions are starting to occur in the ASX gold sector, encouraged by a high gold price which has brought lots of cash to gold miners’ balance sheets.
The Kalgoorlie Super Pit operators will form a $16bn market value gold company with target production of 2 million ounces.
The proposed deal between Dacian Gold and NTM Gold is supported by the two companies’ boards of directors representing 32.8 per cent of their new company’s voting interest.
Supporters of the merger include NTM Gold shareholders, Empire Resources Group and DGC Gold, with interests of 13.7 per cent and 13.6 per cent, respectively.
NTM Gold was a presenter at the recent Diggers and Dealers mining conference in Kalgoorlie.
Dacian is to acquire 100 per cent of NTM Gold, with its shareholders receiving 1 Dacian share for every 2.7 NTM shares they hold.
This represents an implied offer price of 14.1c per share based on Dacian Gold’s 30-day volume weighted average price (VWAP), and a 26 per cent premium to the 30-day AWAP of both companies.
This will give Dacian shareholders 68.4 per cent of the merged gold miner, and NTM shareholders will own 31.6 per cent.
Dacian Gold raised $98m from investors in May to repay debt and fund exploration activity.
The merged company will have a pro forma market value of $285m, cash and equivalents of $44m and debt of $39m at the end of September.
The merged entity will have a highly prospective land position of 1,300sqkm in the Leonora-Laverton district with a significant pipeline of growth targets.
The merger takes effect on February 23, 2021.