Metalicity has made a bid to consolidate the ownership of its promising Kookynie and Yundamindra gold projects in WA, lobbing a $12.8 million all scrip bid for its JV partner Nex Metals.
Metalicity (ASX:MCT) owns 51% of the Kookynie and Yundamindra gold projects, where bonanza grades at the exciting McTavish prospect upwards of 90g/t sparked the interest of investors in July.
The move would merge the ownership of the projects under one banner, improving the companies’ access to capital, generating cost savings and enhancing their overall balance sheet position to accelerate their timeline towards developing the future mining operations.
Under the terms of the offer, Nex (ASX:NME) shareholders would receive 4.81 Metalicity shares for every 1 share they own in NME, valuing the company at 4.8c per share.
That would come in at a 30% premium to Nex’s last traded price of 3.7c a share, 29% based on the volume weighted average price over the past 15 trading days and a 27% premium based on the 30-day VWAP.
Metalicity has driven the successful discovery program in the Goldfields since agreeing a deal to farm-in to the Kookynie and Yundamindra tenements in May 2019, spending $5 million on exploration and drilling to earn its controlling 51% stake in the projects.
Merger ‘makes logical sense’
Metalicity chairman Andrew Daley said the merger, which would give Nex shareholders 37.5% of the combined entity, was a logical step for shareholders of both companies.
“The combination of Metalicity and Nex Metals makes logical sense,” he said.
“The primary asset of both companies is the highly attractive Kookynie and Yundamindra Gold Projects. Rationalising the ownership of the projects into a single listed entity creates a number of compelling benefits for both groups of shareholders, and allows us to better realise and maximise the value of the projects for all shareholders.
“We envisage the combined entity would be able to accelerate the development of the projects through better access to capital, reduced costs and greater efficiencies from removing the current JV structure.”
Word discussions over a tie-up were underway came out as early as February 2020. Daley said after 12 months of talks it was time to put the offer in front of Nex shareholders.
“We have presented a compelling proposal to the board of NME on multiple occasions and believe this offer should be placed in front of their shareholders,” he said.
“We continue to have a close working relationship with NME via the JV and we look forward to the fast and amicable completion of this transaction for the benefit of all shareholders.
“We expect Nex Metals shareholders want to retain exposure to the potential upside of Kookynie and Yundamindra so have structured the offer on a scrip basis with an attractive premium to the most recent closing price.”
What happens next?
Metalicity, which is being advised on the financial side by Harbury, Cannacord Genuity and on the legal side by Steinepreis Paganin, will release its bidder’s statement shortly.
The offer will require the acceptance of 90% of the shares of Nex on issue.
Metalicity says the offer “is an opportunity for Nex Metals shareholders to join a company with a strong management team, a stronger balance sheet and superior share liquidity and valuation metrics.”
This article was developed in collaboration with Metalicity, 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.