Merger to Create +400 kozpa1 Australian Gold Miner Fully leveraged to the gold price
The Mineral Resource and Reserve estimates relating to Karora contained in this announcement have been prepared in accordance with Canadian National Instrument 43-101 ("NI 43-101") standards and have not been reported in accordance with the 2012 Joint Ore Reserves Committee’s Australasian Code for Reporting of Mineral Resources and Ore Reserves ("JORC Code").
Refer to Karora's website at
https://www.karoraresources.com/ or under Karora's profile on SEDAR+ at
www.sedarplus.com for information in relation to the Mineral Resource and Reserve estimates prepared by Karora.
A competent person has not done sufficient work to classify the Mineral Resources in accordance with the JORC Code and it is uncertain that following evaluation and/or further exploration work that the estimate will be able to be reported as a Mineral Resource or Ore Reserve in accordance with the JORC Code.
Please refer to further disclosure required by the ASX Listing Rules together with a more detailed resource table at the conclusion of this announcement.
Transaction Highlights:
■ Westgold Resources Limited (ASX: WGX, OTCQX: WGXRF – “Westgold”) and Karora Resources Inc. (TSX: KRR, OTCQX: KRRGF – “Karora”) have agreed to combine in a merger pursuant to which Westgold will acquire 100% of the issued and outstanding common shares of Karora (“Karora Shares”) by way of a statutory plan of arrangement under the Canada Business Corporations Act (“CBCA”) (“Transaction”). ■ Karora shareholders will receive 2.524 Westgold fully paid ordinary shares ("Westgold Shares"), A$0.68 (C$0.612 ) in cash and 0.30 of a share in a new company to be de-merged from Karora (“SpinCo”) for each Karora share held at the closing of the Transaction (“Offer Consideration”).
The Offer Consideration represents approximately A$6.60 (C$5.902 ) per Karora share based on Westgold’s closing share price on the ASX of A$2.28 on 5 April 2024.
■ SpinCo’s assets will comprise Karora’s existing 22.1% interest in Kali Metals Limited (ASX:KM1) (“Kali”), a 1% lithium royalty on certain mining interests held by Kali, the right to receive a deferred consideration payment due to Karora relating to the on-sale of the Dumont asset and A$6 million (C$5 million2 ) in cash. SpinCo will be owned 100% by existing Karora shareholders.
■ The Offer Consideration represents a 10.1% premium to Karora’s closing share price on the Toronto Stock Exchange (“TSX”) of A$5.995 (C$5.3602 ) on 5 April 2024 and a 18.9% premium to Karora’s 20-day volume weighed average price (“VWAP”) on the TSX of A$5.552 (C$4.9642 ) up to and including 5 April 2024.
■ Upon completion of the Transaction, Westgold shareholders will own 50.1% of the combined company (Westgold after completion of the Transaction referred to as “Enlarged Westgold”) and former Karora shareholders will own 49.9%. 3
■ Enlarged Westgold will have a market capitalisation of approximately A$2.2 billion4 (C$1.9 billion2 ).
■ Enlarged Westgold will have a portfolio of assets capable of producing +400kozpa5 from an exclusively Western Australian asset base, a clear pipeline of growth projects and highquality exploration targets supported by financial resources of circa A$160 million (C$143 million2 ) (subject to requisite consents).
■ The Enlarged Westgold intends to apply for quotation of its Westgold Shares on the TSX on completion of the Transaction.
■ The Transaction has been unanimously approved by the boards of directors of Westgold and Karora, and Karora’s board of directors has recommended that their shareholders vote in favour of the Transaction.
■ Directors and members of senior managementof Karora holding 1.2% of the outstanding Karora Shares have entered into voting support agreements to vote their Karora Shares in favour of the Transaction at the meeting of shareholders to be called by Karora to approve the Transaction (“VSAs”). In addition, key institutional shareholders with a combined shareholding of approximately 9% including Eric Sprott have signed VSAs or otherwise have indicated they would support the Transaction.
■ The Transaction represents a transformational step change in growth for both Westgold and Karora shareholders:
Creates a globally investable, mid-tier gold producer operating exclusively in Western Australia with a highly complementary combination of mining and processing assets, people and balance sheet;
✓ Top 5 largest, ASX listed Australian gold producer based on the pro forma market capitalisation with combined Ore Reserves of 3.2Moz6 and Mineral Resources of 13Moz7 ;
✓ One of the largest unhedged Australian gold producers on completion of the Transaction providing investors with full exposure to the gold price8 ;
✓ Combined pipeline of advanced organic growth options and exploration targets across Karora’s Beta Hunt and Higginsville properties and Westgold’s Murchison and Bryah properties;
✓ Estimated operating synergies9 of A$209 million (C$187 million2 ) and estimated corporate savings10 of A$281 million (C$251 million2 ); ✓ Robust balance sheet with financial resources of circa A$160 million (C$143 million2 ) in cash and liquidity through Westgold’s existing corporate revolver facility (subject to requisite consents) and following full repayment of Karora’s existing A$44 million (C$39 million2 ) revolving facility to support an accelerated resource development program at the Beta Hunt Fletcher Zone and Bluebird-South Junction;
✓ Enhanced capital markets profile with increased scale, trading liquidity and quality to be attractive to both gold and generalist investors across ASX, TSX and OTCQX;
✓ Significant re-rating potential via increased scale and increased index weighting, such as the GDX and GDXJ indices; and
✓ Combined board of directors comprising experienced mining professionals with a proven track record of maximising value for shareholders. Westgold's JORC Mineral Resources and Ore Reserve estimates are provided in the report titled “Westgold Westgold Managing Director and CEO Wayne Bramwell commented: “The prize here is Beta Hunt’s gold potential. Rarely do you find a gold asset of the quality and potential of Beta Hunt hiding in a nickel belt and drilling is expected to further unlock value at this mine. This merger brings Beta Hunt together with Big Bell, the emerging Bluebird and the iconic Great Fingall mine under one Australian management team. These assets combined create the foundations of a new Australian gold mining powerhouse that is focused on free cash generation, is internationally relevant and investable and can stand head and shoulders alongside the biggest names in the Australian gold sector.
The Westgold and Karora teams have independently been structuring our businesses for growth for several years and now is the time to bring these two businesses together.
Overprint an experienced and expanded team with similar corporate journeys, strong safety and cultural alignment and a shared commitment to developing its people and we have a new business dominant across two historic, yet under-explored goldfields.
The expanded business will have several large mines, be well funded, fully leveraged to the gold price and have optionality over an enviable selection of growth opportunities.
the business will have expanded human and physical resources to extend mine lives and production scale rapidly.
Westgold welcomes the Karora team, shareholders and stakeholders to the Westgold family and looks forward to creating value across two of Western Australia’s most iconic goldfields
” Karora Chairman and CEO, Paul Huet commented: “For the last two years, Karora has watched Mr. Bramwell and the team consistently unlock material value for shareholders at Westgold.
One of the more unique aspects of this transaction is a very strong cultural fit between both companies which will serve shareholders of the enlarged company well for a very long time.
The mergeris estimated to unlock approximately A$490 million of operational, G&A and capex synergies while shareholders will become proud owners of the largest unhedged gold producer in Australia at completion of the Transaction – certainly a compelling opportunity in the current gold price environment.
The team at Karora have worked diligently to execute on our strategy to build the next +200 kozpa Australian gold producer11 .
We have delivered value to shareholders through a disciplined growth approach by investing in our cornerstone asset in Beta Hunt, which will be fully ramped up to 2 Mtpa12 later this year, our pipeline of projects at Higginsville and through strategic asset acquisitions such as the Lakewood Mill and Spargos Gold Mine to establish the next emerging junior gold producer in the Western Australia gold fields.
etc etc etc ( it goes on and on )
i hold WGX
man, that is an awful lot of salesmanship there , please be careful