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Australian gold miner Gascoyne Resources has received a takeover bid from rival Westgold Resources.

Westgold is offering one of its shares to Gascoyne shareholders for every four Gascoyne shares.

Representing a 34.7% premium to Gascoyne’s last close, the deal will have a consideration of $75.3m (A$104.8m), according to Reuters.

The deal, if successful, would make ASX-listed Westgold Australia the fifth-largest domestic gold producer.

Earlier this year, Gascoyne signed binding documentation with Firefly Resources to demerge their copper-gold and lithium exploration assets into Firetail Resources, a newly incorporated wholly owned subsidiary of Firefly.

The new subsidiary would own assets such as the Paterson Copper-Gold Project, the Forrestania Gold Project, and lithium mineral rights over various tenements held by both companies.

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By GlobalData

Westgold said that its offer provides Gascoyne shareholders with a ‘substantially superior’ financial alternative compared with the proposed merger with Firefly.

The takeover proposal, however, is subject to Gascoyne not proceeding with the ‘highly dilutive’ merger with Firefly.

Westgold executive director Wayne Bramwell said that the firm’s proposal provides a clear and logical alternative to Gascoyne, reducing uncertainty and risk around the Dalgaranga mine, the future of Mt Egerton and Glenburgh and the funding risks to Gascoyne shareholders.

Bramwell stated: “The combination of Westgold and Gascoyne is strategic and value accretive for both groups as we believe the regional integration of mining, processing infrastructure, exploration assets and people can rapidly expand production capacity above 350,000oz per annum with excess ore from Westgold’s Cue operations extending Dalgaranga’s operating life.

“With the Westgold announced intention to bid before them, the Gascoyne shareholders now have a superior financial and technical proposal that delivers a premium for their stock and finally the win they deserve.”

Westgold expects the transaction with Gascoyne to significantly increase the combined company’s mineral resource base to exceed 9.1Moz.

In August 2021, Gascoyne rejected a takeover offer from Rivet Group, citing that the offer was ‘not a superior proposal’ to the merger with Firefly.