Brightstar to Drive Consolidation of Sandstone District

Brightstar Resources Ltd (ASX: BTR) (Brightstar) and Alto Metals Limited (ASX: AME) (Alto) are pleased to announce that they have entered into a binding Scheme Implementation Deed under which Alto agrees to propose a scheme of arrangement between Alto and its shareholders under Part 5.1 of the Corporations Act 2001 (Cth) (Scheme).

Highlights:

• Brightstar Resources Limited (Brightstar) and Alto Metals Limited (Alto) have entered into a Scheme Implementation Deed (SID) under which Alto agrees to propose a Scheme of Arrangement (Scheme) for the acquisition of 100% of Alto
• Concurrently, Brightstar has entered into a Tenement Sale Agreement with Gateway Mining Limited (Gateway) under which Brightstar has agreed to acquire 100% of the Montague East Gold Project (with Gateway to retain all non-precious metal rights) for consideration of $14.0m comprising cash, scrip and contingent payments (Montague Acquisition)
• Under the Scheme, Alto shareholders will receive 4 Brightstar shares for each Alto share held on the Record Date (Scheme Consideration)
• The Scheme Consideration has an implied value of approximately 6 cents¹ per Alto share, representing a significant premium of:
  • ~82% to the closing Alto share price of 3.3 cents per share on 30 July 2024; and
  • ~81% to Alto’s 30-day VWAP of 3.3 cents per share up to and including 30 July 2024
• The Scheme Consideration implies a fully diluted equity value for Alto of $44.4m
• The Alto Board unanimously recommends the Scheme, and the Alto Directors intend to vote all Alto shares in which they have a relevant interest in favour of the Scheme, in each case in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of Alto shareholders²
• Alto’s largest shareholder, Windsong Valley Pty Ltd representing ~15% of the Alto shares on issue, has confirmed to Alto that it intends to vote such of those shares that it holds at the time of the Scheme vote in favour of the Scheme, in the absence of a superior proposal and subject to the independent expert concluding (and continuing to conclude) that the Scheme is in the best interests of Alto shareholders
• Brightstar to raise up to $24m (before costs) at 1.5 cents per share via a two-tranche placement (Placement), which represents a nil discount to the last traded price
• The Scheme is conditional on completion of the Placement, however neither the Placement nor the Montague Acquisition are conditional on completion of the Scheme
• Following completion of the Placement, the Scheme, the Montague Acquisition and the issue of Topdrill Shares and Genesis Shares (refer below), the pro forma Brightstar Group (Combined Group) will have:
  • Pro-forma 3.0Moz Au of JORC (2012) Mineral Resources³
  • Pro-forma cash position of $31m with potential debt finance facilities totalling $36m
  • Strategic ~1,100km² landholding in the Sandstone region provides a third production hub (Sandstone Hub) to complement existing Brightstar production, development and exploration asset portfolio
  • Existing shareholders of Brightstar (including Placement participants), Alto and Gateway holding approximately 66%, 29% and 5% of the Combined Group⁴
• Brightstar has separately executed a Non-Binding Indicative Offer (NBIO) with a South Korean strategic investor for a multi-tranche investment of $40m, including an upfront $4m equity investment (unconditional and included in the Placement) and a $36m gold offtake financing arrangement

OVERVIEW

Under the terms of the Scheme, Brightstar will acquire 100% of the shares in Alto and each Alto shareholder will receive 4 new Brightstar shares for each Alto share held on the record date for the Scheme⁵.

In addition to the Scheme, Brightstar, via a newly incorporated wholly owned SPV ‘Montague Gold Project Pty Ltd’ (MGP), has entered into a Tenement Sale Agreement with Gateway Mining Limited (ASX:GML) (Gateway), and its wholly owned subsidiary Gateway Projects Pty Ltd (GPWA), under which MGP proposes to acquire Gateway and GPWA’s interests held in certain mining tenure in respect of Gateway’s Montague

East Gold Project, with MGP obtaining 100% of the gold mineral rights and Gateway retaining all other mineral rights (Montague Acquisition).

The Montague Acquisition is not conditional on the Scheme completing and, subject to the satisfaction of the relevant conditions precedent (see description further below), will proceed independently of the Scheme.

On implementation of the Scheme and completion of the Montague Acquisition, Brightstar will become a significant junior West Australian gold explorer, developer and producer with a material exploration and development platform. The Scheme and Montague Acquisition will consolidate highly prospective exploration ground in the Sandstone region which will complement Brightstar’s existing production, development and exploration asset portfolio, for the benefit of both Brightstar, Alto and Gateway shareholders.

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