Forrestania Resources to Acquire Kula Gold in AU$58.89 Million Deal

Forrestania Resources (ASX:FRS) said on Tuesday (October 14) that it has entered into a bid implementation agreement to acquire all the issued and outstanding shares of Kula Gold (ASX:KGD) it does not own.

Forrestania currently holds 144,616,665 Kula shares, or 12.56 percent.

Its offer is a no-cash transaction of one fully paid ordinary share in Forrestania for every 5.6 Kula shares.

Based on this calculation, the transaction values Kula Gold at around AU$58.89 million.

“This transaction marks a natural progression in bringing together two complementary exploration portfolios within one of Western Australia’s most prolific gold belts,” said Forrestania Chair David Geraghty.

Kula's Western Australian portfolio includes the Southern Cross region gold projects, the Lake Rebecca gold project and the Mount Palmer gold project. According to the companies, these assets are “highly complementary” to Forrestania’s existing project portfolio, including its cornerstone Forrestania property.

On October 9, Kula gave a progress update on Phase 1 drilling at Mount Palmer, saying diamond drilling had been completed, and a large reverse-circulation rig had started drilling to complete the program's first phase.

“The consolidation of assets in the Southern Cross district advances the ambitions of both companies to become gold producers and will provide important economies of scale,” commented Kula Chair Mark Stowell.

Forrestania said that Kula's board has unanimously recommended that shareholders accept the offer.

The transaction remains subject to customary conditions. Lodgement of bidder’s statement is scheduled on October 27, and the end of the offer period is set for December 1.

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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.