Dacian Gold currently owns 100% of the producing Mt Morgans gold project in Laverton, Western Australia (WA).
Under the proposal, Genesis Minerals will provide 0.0843 of its share to Dacian Gold’s shareholders for each share held, at A$0.102 ($0.069) apiece.
Dacian Gold’s directors have unanimously recommended its shareholders accept Genesis Minerals’ offer if there is no superior bid.
On a pro forma basis, the shareholders of Dacian will hold a 25.5% stake in the merged group.
Genesis Minerals managing director Raleigh Finlayson said: “This transaction is the first step towards our vision of building the premium Australian gold miner, targeting +300,000oz per annum of sustainable, high-quality gold production.”
Upon deal completion, the combined entity will have resources of nearly 4.5Moz located exclusively in the Leonora district.
Dacian Gold non-executive chair Mick Wilkes said: “Since pouring first gold in March 2018, Dacian has produced over 500,000oz from its Mt Morgans operations, yet has continued to face operational challenges in the current environment that led to a review of the operating strategy in June 2022 and the decision to suspend mining activities.
“The company is transitioning to processing low-grade ROM stockpiles and will continue to focus on expanding the Mineral Resources at Jupiter based on the recently announced drilling results.”
Genesis Minerals plans to undertake a strategic review of the Mt Morgans operation in the December half of 2022.
The review would consider options including processing stockpiles, care and maintenance; regional consolidation/operation synergies; resuming mining after a more accommodative cost/labour backdrop.
Furthermore, Genesis Minerals is in talks with another rival, St Barbara, over a possible business combination, aimed at consolidating operations in the Leonora district.
However, the firm stressed that the possibility of a deal materialising is still not certain.