Leonora-Laverton district gold plays Dacian Gold (ASX: DCN) and NTM Gold (ASX: NTM) have agreed to merge – a move that will link NTM’s undeveloped Redcliffe gold project with Dacian’s Mt Morgan processing plant.
The two projects lie within 100km of each other.
In a joint statement, the companies have also revealed that other projects may be in their sights, saying that the larger combined entity will have “further opportunity for regional consolidation”.
Dacian will acquire 100% of NTM shares under a scheme of arrangement, with NTM shareholders to receive one Dacian share for every 2.7 NTM shares. Options will be converted at the same ratio.
NTM shareholders will end up owning 31.6% of the merged entity.
Two largest shareholders back merger
Both companies’ assets are located in the Leonora-Laverton district of Western Australia and are surrounded by several multi-million ounce deposits.
NTM’s Redcliffe project has a shallow resource (spread over several deposits) of 13.4 million tonnes at 1.57 grams per tonne gold for a contained 679,000oz.
The project has available several haulage routes for its ore to be integrated into Dacian’s processing plant.
Group to hold 2.75Moz resource
The merged group will hold a resource of 45.4Mt at 1.88g/t gold for a contained 2.75Moz.
Dacian managing director Leigh Junk says the merger will diversify the enlarged group’s production base and increase operational flexibility at Mt Morgans.
“This is a logical step for Dacian to expand operations in our region by unlocking resources within haulage distance of our substantial processing infrastructure, enabling future resource and reserve additions to be brought quickly into production.” he added.
Meanwhile, NTM managing director Andrew Muir said the merger will unlock the value of Redcliffe.
“The transaction is an outstanding opportunity for NTM given the proximity of both companies’ assets and delivers to NTM shareholders immediate exposure to gold production while still enabling them to benefit from future exploration success at both Redcliffe and Mt Morgans,” he said.
Mr Junk will continue as managing director of the merged group with NTM director Eduard Eshuys joining the Dacian board.
NTM’s exploration team will also be retained by the merged group.
Once the transaction has been completed, the combined entity will have an expected market capitalisation of $285 million, cash of $44 million and debt of $39 million.