PNX Metals (ASX:PNX) has accepted Kin Mining’s proposal to merge via a scheme of arrangement under which PNX shareholders are set to receive one Kin share for every 13 PNX shares they own.
The deal is worth around $35.2 million based on the closing price of Kin’s shares last Thursday (11 April 2024), roughly 31% more than PNX’s market value of just under $27 million on the same day.
On a like for like basis, the deal represents a 23.9% premium based on the 10-day volume weighted average price of Kin and PNX shares, respectively.
PNX shareholders welcomed the news today (15 April 2024), with shares rallying 20%, but Kin shareholders were not as excited about the deal with the stock dropping over 10%.
The merged group will be capitalised at $123 million with just shy of $90 million in cash and liquid investments, no debt and an enlarged resource inventory of over 1.4 million ounces (Moz) of gold, 16.2 Moz silver and 177,000 tonnes of zinc.
It would also have an implied pro-forma enterprise value of $33.4 million.
PNX and Kin directors have unanimously recommended the merger to shareholders and indicated their intention to vote in favour of the deal.
PNX flagged back in mid-February that Kin had handed it an unsolicited, non-binding, indicative, and incomplete proposal in relation to a potential merger, but said there was no certainty that a deal would be cemented.
PNX Executive Chairman Graham Ascough says the merger is set to create “one of the most exciting growth stocks in the junior resource sector on the ASX”.
“PNX shareholders will gain exposure to Kin’s high-quality gold projects in the Leonora region, where it has a proven track record of value-creation through its recent transactions with Genesis Minerals,” he says.
“Kin’s retained gold inventory in this district offers outstanding optionality and growth potential, particularly in a rising gold market, along with the upside of its recent VHMS base metal discovery and other recent exploration breakthroughs.
The combined entity’s strong funding position and enhanced liquidity will allow us to accelerate exploration of PNX’s exciting Thunderball Uranium Project and the development of our gold, silver and polymetallic resources at Fountain Head and Hayes Creek.”
Meanwhile, Kin Executive Director Nicholas Anderson says the proposed merger is consistent with the company’s strategy of leveraging its strong balance sheet and expertise to pursue value-adding M&A and corporate opportunities Australia-wide.
Anderson adds: “PNX has an extensive and high-quality tenement portfolio in the Pine Creek region of the Northern Territory, one of Australia’s most prolific resource provinces.
“This portfolio includes a unique mix of development-level zinc, gold and silver assets and an exciting uranium deposit at Thunderball that has sat dormant for over a decade.
Kin’s strong balance sheet position gives us the capability to evaluate and fast-track the exploration of these projects, in parallel with our ongoing gold and base metal exploration at Cardinia in WA.”
If the deal receives the backing of both company’s shareholders, Kin shareholders will own 72% and PNX shareholders will hold 28% of the merged company.
Write to Angela East at Mining.com.au
Images: PNX
