The combined entity will have resources of around 4.5Moz located exclusively in the Leonora district in Western Australia
Genesis Minerals has offered to acquire rival Australian gold development and exploration company Dacian Gold in an all-stock deal worth A$111m ($75.3m).
Dacian Gold owns 100% of the producing Mt Morgans gold project in Laverton, Western Australia.
Genesis Minerals, on the other hand, owns the Leonora gold project, which is also located in Western Australia. The company’s March 2022 resource was 39.3Mt @ 1.6g/t for 2.0Moz Au.
Both Genesis Minerals and Dacian Gold are listed on the Australian Securities Exchange (ASX).
As per the offer, Dacian Gold’s shareholders will exchange each of their shares in the company for 0.0843 shares of Genesis Minerals. The share exchange ratio values each of Dacian Gold’s shares at A$0.102 ($0.069).
Dacian Gold’s directors plan to unanimously recommend the company’s shareholders accept Genesis Minerals’ offer in the absence of a superior proposal.
Dacian Gold non-executive chair Mick Wilkes said: “Since pouring first gold in March 2018, Dacian has produced over 500,000 ounces from its Mt Morgans operations, yet has continued to face operational challenges in the current environment that led to a review of the operating strategy in June 2022 and the decision to suspend mining activities.
“The Company is transitioning to processing low-grade ROM stockpiles and will continue to focus on expanding the Mineral Resources at Jupiter based on the recently announced drilling results.”
Genesis Minerals said that the acquisition if completed will result in sensible regional consolidation by bringing together its organic growth and high-grade resources and Dacian Gold’s large-scale strategic milling infrastructure at the Mt Morgans project.
The combined entity will have resources of nearly 4.5Moz located exclusively in the Leonora district, with a focus on growth via exploration and a pathway to production with the existing milling solution.
Genesis Minerals plans to carry out a strategic review of the Mt Morgans operation in the December half of 2022.
The possible outcomes of the review could be processing stockpiles, followed by care and maintenance or regional consolidation/operation synergies, or re-starting mining after a more accommodative cost/labour backdrop in Western Australia.
Genesis Minerals managing director Raleigh Finlayson said: “This transaction is the first step towards our vision of building the premium Australian gold miner, targeting +300,000 ounces per annum of sustainable, high quality gold production.
“Sensible M&A is a key component of our multi-pronged growth strategy, and our team has a strong track record of executing transactions that deliver outstanding value for shareholders. Consolidation of the world-class Leonora District is a natural fit for Genesis.”
Genesis Minerals also revealed that it has been in talks with another rival gold company St Barbara about a possible business combination aimed at consolidation of the Leonora Province.