Echo Resources (ASX:EAR) looks like it may be swallowed up by major shareholder Northern Star Resources (ASX:NST) in a deal worth $193m — sending Echo shares up in early trade.

Northern Star lobbed in the cash offer this morning, offering shareholders 33c for every Echo share held.

  • Scroll down for more ASX gold news >>>

This is a 39.4 per cent premium on the company’s volume weighted average price (VWAP) on August 19 (the last day Echo was traded before it was placed in a halt).

It’s also a 42.1 per cent premium on Echo’s 10-day VWAP, a 49.7 per cent premium on Echo’s 20-day VWAP, and an 80.3 per cent premium on Echo’s 60-day VWAP.

Shares jumped as much as 30 per cent to 32.5c after the news broke.

Given Northern Star already has 21.7 per cent of Echo’s register and the independent directors at Echo have recommended shareholders take the deal — it’s likely this one will go through.

The offer is for $193m, but the deal gives Echo an implied valuation of $242.6m — Echo currently has a market cap of $172.77m.

Northern Star has cash and cash equivalents of $361m, and a debt facility of $200m on hand, meaning the offer is funded.

For its cash, Northern Star will get its hands on the Yandal gold project — about 400km north of Kalgoorlie.

RBC Capital Markets mining analyst Paul Hissey said in a research note this morning that Echo represented a strategic opportunity for Northern Star given the proximity of the former Bronzewing gold project to Northern Star’s Jundee operation.

It comprises 2600sqkm of contiguous tenements over the Yandal greenstone belt, and comes with a 1.8 million-ounce-per-annum processing plant.

With Northern Star also in the neighbourhood, it will consolidate the mineralisation at Yandal for “further evaluation on both an exploration and development basis”.


In other ASX gold news:

Alacer Gold (ASX:AQG) has drilled another 34 holes at Adrich in Turkey, adding another 1200m of strike.

Hits included:

  • 33.1m at 4.21 grams per tonne (g/t) gold from 131.4m, including 10.6m at 10.03g/t from 133.1m
  • 50.6m at 2.73g/t from 122.9m, including 10.3m at 8.04g/t from 148.7m
  • 29m at 4.81g/t from 113.7m, including 7m at 11.74g/t from 119.7m

Anglo Australian Resources (ASX:AAR) has final assays back at its Mandilla project, with hits including 60.2m at 3.79g/t gold from 65.8m at Mandilla East, and 37m at 1.05g/t from 69m at Mandilla South.

Meanwhile, Tietto Minerals (ASX:TIE) has also reported back drilling results from several holes from its 1.7-million-ounce project at Abujar in Cote D’Ivoire. Hits included 73m at 2.8g/t gold from 218m, 2m at 15.32g/t from 278m, 3m at 5.11g/t from 307m, and 8m at 3.47g/t from 241m. It said the results effectively confirmed continuous strike extension at depth for at least 700m.

Finally, Silver Lake Resources (ASX:SLR) has reported its full year results to the market, with non-recurring net profit after tax coming in at $16.7m. It also recorded a boost to gold production of 6 per cent to 166,695 ounces and a revenue boost of 24 per cent to $130.7m.