Junior gold players Spitfire Materials and Excelsior Gold have struck a merger deal to fast-track the two companies to production.

The deal values Excelsior (ASX:EXG) at roughly $37 million, or 4.4c per share – a 10.7 per cent premium to the explorer’s closing price last Friday.

Excelsior shareholders will receive one new Spitfire (ASX:SPI) share for approximately every 2.208 Excelsior shares.

This latest merger announcement comes just six months after Spitfire completed its marriage to Aphrodite Gold.

“This may be one of the few ‘one plus one equals three’ scenarios in the WA gold sector, as the synergies between the two companies are exceptional,” Excelsior boss Rowan Johnston told investors this morning.

“There is no doubling up of management or board skills, the two companies will blend seamlessly into one, and the leases adjoin each other – which means no duplication of infrastructure or site personnel.

“So, essentially this merger will result in one project, one office and one board with over 2.1 [million ounces] in resource and the critical mass to potentially generate a meaningful production profile.”

Excelsior Gold (ASX:EXG) shares over the past year.
Excelsior Gold (ASX:EXG) shares over the past year.

Spitfire managing director John Young labelled the deal a “game-changing transaction”

“The merged entity will have the scale, relevance, access to capital and management capability to build a significant new mid-tier Australian gold producer,” he said.

“The combination of our respective WA gold assets gives us the critical mass to pursue a near-term development strategy based on the establishment of a new production hub near the world-class mining centre of Kalgoorlie.”

The deal is being struck under a scheme of arrangement that will see Spitfire shareholders own roughly 58.3 per cent and Excelsior shareholders own about 41.7 per cent of the larger company.

Spitfire and Excelsior have neighbouring North Kalgoorlie gold projects that stretch for about 200 square kilometres.

The plan post-merger is to immediately begin a pre-feasibility study of the combined Aphrodite and Kalgoorlie North gold projects.

The merged entity will be led by Mr Young, who together with Neil Biddle founded lithium miner Pilbara Minerals (ASX: PLS).

Mr Biddle joined Spitfire following the acquisition of Admiral Gold in March last year.
He has been progressively increasing his stake in Spitfire, telling Stockhead in February he wanted to have about 20 million shares.

As of early April, Mr Biddle held about 17.2 million shares and 5 million performance rights.

Following the merger, Mr Biddle and Mr Johnston will stay on as executive directors.

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