Australian gold producer Pantoro has signed a binding merger implementation deed with Tulla Resources to acquire the latter and create a new mid-cap ASX-listed gold company.
In accordance with the agreed terms, Tulla Resources’ shareholders would receive 4.96 Pantoro ordinary shares for each share held in the company. The deal represents a 24.7% premium to Tulla Resources’ last close.
Pantoro currently owns a 50% stake in the Norseman gold project in the Eastern Goldfields of Western Australia. The stake was acquired from Tulla Resources in 2019.
Upon completion of the latest transaction, Pantoro will take full ownership of the Norseman gold project.
The combined entity is expected to have an annual production capacity of 110,000oz. It would have a mineral resource of 4.79Moz and an ore reserve of 0.98Moz.
Pantoro managing director Paul Cmrlec said: “Consolidating the Norseman gold project into a single entity is a logical step for all parties to maximise value as the project ramps up to reach its full potential as a premier gold asset in Western Australia.”
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Post-deal completion, Pantoro shareholders will have a 51.5% interest in the merged entity. Tulla shareholders will own the remaining 48.5% stake.
Tulla and Pantoro boards have recommended its shareholders accept the offer in the absence of a superior bid.
Furthermore, Pantoro plans to launch a two-tranche institutional placement to raise A$75m ($51.89m) to support the acquisition.
The proceeds from the placement, along with existing cash, will be used by the firm to fund the Norseman ramp-up work, as well as support the investment in exploration and ore reserve growth.
Cmrlec added: “While Norseman has experienced delays and challenges in its ramp-up, key operational and management changes made late in 2022 are now yielding positive results, with productivity and throughput increasing month-on-month and process plant ramp-up now virtually complete to nameplate capacity.
“The equity raising ensures that the combined group is well funded through the initial phases of production and enables the reduction of the consolidated debt position of the company during this critical phase.”