Silver Lake Resources has entered a binding scheme implementation deed with fellow gold company Doray Minerals to create a new “mid-tier growth-focused gold producer.”
Silver Lake Resources (ASX:SLR) announced on Wednesday (November 14) that it has entered a binding scheme implementation deed with fellow gold company Doray Minerals (ASX:DRM) to create a “mid-tier growth-focused gold producer.”
The proposed merger would see Doray shareholders receive 0.6772 shares of Silver Lake for every Doray share they own, signifying a 37.3-percent share in the to-be merged company. Meanwhile, Silver Lake shareholders would take the lion’s share of the merged company with a 62.7-percent stake.
The estimated market capitalization of the merged company sits at AU$421 million.
“Both companies have recognized the challenges of being a significant producer in the gold business and this transaction puts us in a position to not only compete, but to be a sustainable and relevant player in the global gold industry,” Doray Managing Director Leigh Junk said in a statement.
“Doray has taken great care to find a partner with aligned growth ambitions and a strong operating culture, and Silver Lake fits that bill.”
If the merger is a success, the newly formed company will have a mineral resource base of 4.6 million gold equivalent ounces and a 2019 production guidance of about 240,000 gold equivalent ounces.
Additionally, Silver Lake’s Mount Monger operation and Doray’s Deflector gold-copper project both have pipelines of brownfield exploration targets, giving the merged company plenty of prospects and potential mine life extension opportunities.
“Silver Lake’s operating strategy has increased the value of our Mount Monger gold camp through a successful exploration and investment program over the past four years,” Silver Lake Managing Director Luke Tonkin said.
“The combination of the complementary Silver Lake and Doray assets is being done for the right reasons at the right time and creates a stronger company in a low- risk jurisdiction with financial strength and further growth opportunities.”
While Doray’s board of directors has unanimously recommended the merger, the deal is still waiting on shareholder and court approval. If approved, the merger is expected to be implemented in March 2019.
Doray shares were down 11.11 percent at the end of trading on the ASX on November 14, closing at AU$0.32 per stock. Meanwhile Silver Lake’s shares closed at AU$0.47, down 9.62 percent.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.