Australian firm Silver Lake Resources has signed a bid implementation deed (BID) to acquire all of the issued and outstanding shares of EganStreet Resources.

The $52m deal aims to capitalise on the underground Rothsay gold project in Western Australia.

The Rothsay project is located 85km south-east of Silver Lake’s Deflector mine and processing hub.

With 454,000oz of resources and 200,000oz of reserves, Rothsay has progressed through the exploration and study phase under EganStreet stewardship.

Silver Lake managing director Luke Tonkin said: “The acquisition of EganStreet and its Rothsay Gold Project is consistent with Silver Lake’s strategy of creating new opportunities to compete for capital and maximising the value of the existing asset base.

“Silver Lake’s nearby infrastructure at Deflector can unlock additional value at Rothsay and this is reflected in the share price premium offered to EganStreet shareholders.”

Under the terms of the transaction, EganStreet shareholders will receive 0.270 Silver Lake shares for every EganStreet share held.

EganStreet managing director Marc Ducler said: “This transaction will reward our shareholders for the progress achieved at Rothsay to date while giving them exposure to a successful ASX-300 gold producer with a strong balance sheet, diversified production profile, mine development expertise, established systems and practices and installed infrastructure.

“This will significantly mitigate the development risk at Rothsay and provide exposure to a much larger and highly liquid Australian gold producer with the ability to attract an investment premium in the current strong Australian dollar gold market.”

EganStreet’s largest shareholder Lion Selection has also signed a pre-bid acceptance deed with Silver Lake under which it has agreed to accept the offer in respect of its 16.2% holding.