Ground Breakers: Gascoyne caught between a rock and a hard place as Firefly merger clears court hurdle
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Westgold Resources’ (ASX:WGX) bid to takeover Gascoyne Resources (ASX:GCY) looks to have ended in a damp squib after the WA Supreme Court gave the go ahead to Gascoyne’s tie-up with Firefly Resources (ASX:FFR) yesterday.
The cancellation of the Firefly merger and a minimum 50.1% acceptance from Gascoyne shareholders were the key conditions for the Westgold offer to proceed.
However, there was one hitch for Peter Cook and Co — even if it could convince the Gascoyne board and major shareholders its all-scrip offer for Gascoyne was the better deal, the agreement left all the power in Firefly’s hands.
The junior explorer’s shareholders were always going to endorse the merger, which will see Gascoyne, the owner of the Dalgaranga gold project, pick up the 196,000oz Melville gold deposit and a 1200km2 contiguous landholding between Mt Magnet and Yalgoo in WA’s mid west.
Gascoyne, which only adopted a supportive position on the Westgold bid late last week, noted it is contractually bound now to proceed with the Firefly scheme, which will be implemented on November 10.
“Notwithstanding the Board’s continued belief in the strategic merits of combining Firefly’s Yalgoo assets with the Dalgaranga operations including the highly prospective nature of the Firefly tenement package and a pending updated mine plan incorporating higher grade ore sourced from Melville, Gascoyne sought to find a way to satisfy the
Firefly Scheme Termination Condition prior to the Court hearing on 1 November 2021 (including by exploring the terms on which Firefly would be prepared to agree to terminate the SID) but these efforts were unsuccessful,” the company said in a statement to the ASX.
“Westgold had filed an application to appear, and accompanying submissions, with the Court seeking to oppose the Scheme but withdrew the application prior to the start of the proceeding.
“The Scheme will now proceed to implementation, with the issue of Gascoyne shares to Firefly shareholders as Scheme consideration scheduled to take place on 10 November 2021. Gascoyne acknowledges that the Company is contractually bound to implement the Scheme as approved by the Court.”
If Westgold still wants Gascoyne, a strategic addition of ounces and processing capacity to its own gold mines in the Murchison district, its only option now would seem to be to acquire it with the Firefly assets in the fold.
The company, which also failed in its efforts to get the Takeovers Panel to intervene, is yet to issue a statement.
The mine in South Australia is one of a handful of restart projects around the world which has been waiting patiently for a turnaround in the uranium price to justify signing contracts with utilities and getting things back up and running.
Since acquiring the mine near the bottom of the cycle in late 2015 Boss has increased Honeymoon’s resources by around 433%, from 16.57Mlbs to 71.67Mlbs of contained uranium oxide.
Uranium drilling in Australia reached a virtual standstill in recent years, but Boss is keen to get back out to Honeymoon on the back of an Accelerated Discovery Initiative grant funded program which included passive and seismic surveys.
Drilling programs in late 2021 and early 2022 will target satellite deposits at Jason’s and Gould’s Dam and new targets identified in the surveys.
“The outstanding results from the seismic reflection surveys prove that our exploration strategy is working well, allowing us to undertake a more targeted drilling campaign,” Boss MD Duncan Craib said.
“Drilling is scheduled to commence in November to simultaneously target the most prospective of our exploration areas, using the combination of passive and seismic reflection data along with the 3D suite of geological models created by our team.
“Value for shareholders and smart use of funding has been foremost in our minds as we plan each successive exploration program, bringing us one step closer to further developing the project’s significant exploration upside towards the eventual increase of both production rates and mine life.”