OceanaGold Acquires Ausgold in US$549 Million Deal

Vancouver-based OceanaGold (TSX:OGC) has agreed to acquire Australian developer Ausgold (ASX:AUC,OTC Pink:AUSGF,OTCPL:AUSGF) for US$549 million, securing full ownership of the Katanning gold project in Western Australia.

The Ausgold board unanimously recommended the transaction, and major shareholder Dundee Corporation, which holds a 7.7 percent stake, confirmed its intention to vote in favor of the deal.

Under the definitive scheme implementation deed announced Monday (August 17), Ausgold shareholders will receive 0.03365 OceanaGold common shares for each share held. Shareholders can also elect to receive cash,subject to an aggregate cap of US$137 million.

Upon closing, Ausgold investors will hold between 6 and 8 percent of OceanaGold.

An updated definitive feasibility study outlines an open-pit operation at Katanning capable of producing more than 100,000 ounces of gold annually over a 10-year mine life. OceanaGold targets first gold production in 2029 following additional drilling and the publication of a revised technical report in 2028.

“The acquisition of Ausgold adds an advanced, high-quality, low-capital, open-pit development asset to our portfolio at an attractive valuation,” President and CEO Gerard Bond said in the announcement.

“The Katanning gold project will be our fifth asset, located in one of the world’s premier mining jurisdictions and is a natural fit with our proven development and operating capabilities.”

Recent record bullion prices have fortified producer balance sheets within the gold sector, increasing the capacity of industry players to pursue acquisitions. Spot gold traded near US$4,399 an ounce on Monday (August 17).

OceanaGold also began trading on the New York Stock Exchange (NYSE) in June to improve liquidity and broaden its access to institutional investors.

The Katanning acquisition complements OceanaGold’s existing organic growth pipeline.

The company is developing a new underground mine at Haile in South Carolina, which management expects will eventually account for about 45 percent of its total gold production. It is also advancing the large-scale Waihi North underground project in New Zealand.

Alongside its development projects, OceanaGold recently committed US$1.9 billion to expand and extend the operational lifespan of its flagship Didipio gold and copper mine in the Philippines.

Formalized during a meeting with Philippine President Ferdinand R. Marcos Jr. in Vancouver, the capital deployment extends the mine's life to 2037, overriding previous plans to close the site in 2035.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.