Advisory firm Institutional Shareholder Services (ISS) has recommended Karora Resources (TSX:KRR) shareholders vote in favour of the merger with Westgold Resources (ASX:WGX) at an upcoming meeting on 19 July 2024.
ISS says the arrangement carries sound strategic logic as the combined company is expected to deliver “meaningful cost synergies, benefit from scale, and a stronger financial position, and be more diversified”.
In early April, Westgold announced its plans to merge with Karora and create a pro-forma market capitalisation of $2.4 billion, plus 400,000-ounce-per-year Australian gold miner.
Under the initial proposal, Westgold is offering Karora shareholders 2.524 shares, $0.68 in cash and 0.30 of a share in the new company to be demerged from Karora, for each Karora share held.
On 29 May, the Australian Government’s Takeovers Panel received an application from Ramelius Resources (ASX:RMS) in relation to the affairs of Westgold seeking orders in relation to the standstill restrictions contained in a mutual confidentiality deed between both parties.
The deed included a mutual standstill for a period of 12 months, ending on 14 November 2024.
However, the panel accepted undertakings from Westgold and Karora and declined to make a declaration of unacceptable circumstances in response to Ramelius’ applications.
Westgold announced on 8 July that the Karora transaction has been unanimously approved by the board of directors from both companies.
Westgold CEO Wayne Bramwell says once completed, the transaction will bring a complementary team and assets to establish Westgold 3.0.
“Westgold 3.0 will be a large, unhedged, well-funded owner operator that is fully leveraged to the gold price,” he says.
“With unparalleled organic growth and exploration upside across two strategic West Australian goldfields and a team that has demonstrated the ability to deliver consistent shareholder returns, the value proposition of the expanded business will have enhanced international appeal.”
Write to Aaliyah Rogan at Mining.com.au
Images: Karora Resources
