Australian mineral exploration firm Catalyst Metals has agreed to merge with Toronto-based Superior Gold, valuing the latter at C$55m ($40.4m) or C$0.44 per share.
This marks a 62.8% premium to Superior’s last close on 22 February.
Unanimously recommended by Superior Gold’s board, the deal will see each Superior shareholder get one Catalyst share for every 2.8 shares held.
This merger will help Catalyst gain access to Western Australia’s Plutonic gold mine, with a 5.9Moz resource.
Superior president and CEO Chris Jordaan said: “We are very pleased to offer shareholders the opportunity we have always proposed, the consolidation of the Plutonic-Marymia gold belt, with a meaningful immediate premium, diversification of assets and cash flow and logically, a listing on the ASX.”
According to Jordaan, the consolidation will support the development of the Plutonic mine and surrounding open pit projects.
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The mine has a 3Mtpa processing capacity and can produce 70,000oz of gold per annum.
Catalyst has also moved to the compulsory purchase of the remaining shares in Vango Mining, which owns the adjacent Marymia gold project, for A$66m.
This marks a 19.1% premium to the stock’s last close.
Marymia has a 1Mpta resource, which covers a high-grade component of 517,000 oz at 8.2g/t gold.
The takeover will see Vango shareholders getting five Catalyst shares for every 115 shares held.
Superior shareholders will own a 23% stake in the enlarged Catalyst upon completion of the Superior and Vango deals.
This enlarged business will own three high-grade, highly prospective gold assets, including the enlarged Plutonic-Marymia project, a strategic tenement package in Tasmania, as well as a large tenement package in Victoria.
The Superior deal awaits shareholders and regulatory approvals, as well as requires Catalyst to raise A$20m within 30 days of the agreement.
Catalyst managing director James Champion de Crespigny calls the merger a ‘logical’ one with potential for synergies and risk reduction.
Crespigny noted: “The combination of the large resources, big processing capacity and considerable exploration upside gives the combined group genuine scale, long mine life, strong cashflow and outstanding growth prospects, all in the heart of a world-class gold belt in WA.
“We think this will better appeal to all investors. The Plutonic Gold Belt is significant by any world measure. It has historically hosted high-quality deposits – ie. Timor was over 800,000oz at 7.5g/t.”