Westgold and Karora Resources have announced a merger, which will see Westgold Resources acquire 100 per cent of Karora’s outstanding common shares.

The two companies have agreed to the merger by way of a statutory plan of arrangement under the Canada Business Corporations Act.

Karora Resources said that the transaction will create a diversified Western Australian focused ASX, TSX and OTCQX-listed gold company with a robust portfolio of exploration, development and production assets. 

Each Karora share outstanding at the effective time of the arrangement will be exchanged for the offer consideration, comprising of:

  • 2.524 new Westgold shares, representing AU$5.755 per Karora share held based on Westgold’s last closing share price on the ASX of AU$2.28 on 5 April 2024
  • AU$0.680 in cash
  • 0.30 of a SpinCo share, with an implied value of AU$0.164

The offer consideration represents approximately AU$6.60 per Karora share and a fully diluted equity value of AU$1,233 million based on Westgold’s closing share price on the ASX of AU$2.28 on 5 April 2024. 

The offer consideration represents a 10.1 per cent premium to Karora’s closing share price on the TSX of AU$5.995 on 5 April 2024 and a 25.3 per cent premium to Karora’s and Westgold’s 20-day VWAP on the TSX of AU$5.552 and on the ASX of AU$2.421 up to and including 5 April 2024.

Upon completion of the transaction, existing Westgold and Karora shareholders will own approximately 50.1 per cent and 49.9 per cent of Enlarged Westgold, respectively.

Westgold said it intends to make an application for a secondary listing on the TSX as part of the transaction.

The Enlarged Westgold Board will be comprised of the current directors of Westgold and two directors from Karora. The Hon. Cheryl Edwardes AM will be the Chair of the Enlarged Westgold Board and Wayne Bramwell will be Managing Director and Chief Executive Officer. 

Karora’s Managing Director Australia, Leigh Junk, and Karora Director, Shirley In’t Veld, will be included on the Enlarged Westgold Board. Karora’s Chairman and CEO, Paul Huet, will continue with Enlarged Westgold in a special advisory role for six months post-completion of the Transaction.

In connection with closing of the transaction, Karora will spin-out certain assets to former Karora shareholders, including its shareholding in Kali, a one per cent lithium royalty on certain mining interests held by Kali, the right to receive future payments related to the sale of the Dumont asset and cash of AU$6 million to a newly formed SpinCo. 

Karora Metals said that the strategic rationale and highlights of the merger include:

  • Creation of a leading mid-tier gold producer
  • Diversified production in Tier 1 jurisdiction
  • Exciting organic growth pipeline
  • Material synergies driving substantial value creation
  • Financial resources to execute
  • Enhanced capital market profile

Mr Bramwell said, “The Westgold and Karora teams have independently been structuring our businesses for growth for several years and now is the time to bring these two businesses together. 

“Overprint an experienced and expanded team with similar corporate journeys, strong safety and cultural alignment and a shared commitment to developing its people and we have a new business dominant across two historic, yet under-explored goldfields.”

Mr Bramwell said that the expanded business will have several large mines, will be well-funded, fully leveraged to the gold price and have optionality over an enviable selection of growth opportunities. 

“Importantly, the business will have expanded human and physical resources to extend mine lives and production scale rapidly.

“Westgold welcomes the Karora team, shareholders and stakeholders to the Westgold family and looks forward to creating value across two of Western Australia’s most iconic goldfields.”

Mr Huet said, “For the last two years, Karora has watched Mr. Bramwell and the team consistently unlock material value for shareholders at Westgold. 

“One of the more unique aspects of this transaction is a very strong cultural fit between both companies which will serve shareholders of the enlarged company well for a very long time. The merger is estimated to unlock approximately AU$490 million of operational, G&A and capex synergies while shareholders will become proud owners of the largest unhedged gold producer in Australia at completion of the transaction – certainly a compelling opportunity in the current gold price environment.

“The team at Karora have worked diligently to execute its strategy to build the next 200+kozpa Australian gold producer. With the combination of Westgold and Karora, we are taking the next step by combining two highly complementary, free cash flow generating asset bases in one of the world’s finest mining jurisdictions to create a premier Western Australian mid-tier gold producer.”

Mr Huet said that Karora shareholders will benefit from having very meaningful ownership in a larger, more diversified gold producer with a highly experienced management team located entirely in Western Australia.

“The prospects for the combined company are tremendous, with over 3,200km2 of combined exploration tenements in Australia’s most prospective gold mining regions coupled with a significantly enhanced balance sheet poised and ready to deploy into a highly compelling combined growth and exploration strategy. 

“The combination provides Karora shareholders with significant exposure to one of the largest Australian gold producers with significant potential for an eventual share price re-rate as the operational synergies and enhanced scale of the combined portfolio are realised.”


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