Southern Cross Goldfields and Polymetals merger close to completion

THE BOURSE WHISPERER: The proposed merger between Southern Cross Goldfields (ASX: SXG) and Polymetals Mining (ASX: PLY) is set to be completed early next week.

Southern Cross said it anticipates the ‘New SXG’ shares will commence trading on the Australian Securities Exchange on Wednesday 21 August 2013, as scheduled after all required shareholder and court approvals were obtained last week.
 
The company claims the merger will create a strengthened Australian junior resources company, well placed for growth with a diversified asset base and strong balance sheet.

As at 30 June the combined entity boasted of $11 million, liquid assets of approximately $3 million and debt of approximately $7 million.
 
The company considers this provides it with flexibility and optionality in terms of exploration and development pathways, as well as the ability to take advantage of the growing amount of acquisition and divestment opportunities the current market is presenting.
 
The key assets of the enlarged Southern Cross Goldfields include advanced gold projects at Marda in Western Australai and Mount Boppy in New South Wales.

There is also a fully-permitted 600,000 tonnes per annum CIL gold plant at Sandstone in WA, a 1.6 million ounce Mineral Resource inventory and a prospective combined exploration portfolio covering 4,930 square kilometres in WA and NSW.
 
The combing parties consider the decision to combine their businesses five months ago has positioned them ahead of their contemporaries, especially given recent concerns for the gold sector and the difficulty many companies are having raising cash.

“Shareholders in both companies have voted overwhelmingly in favour of the key elements required to complete the merger, recognising that it represents a compelling combination of two companies with complimentary assets,” Southern Cross Goldfields managing director Glenn Jardine said in the company’s announcement to the Australian Securities Exchange.

“The result is a company which is in a unique space in the current market – with cash and liquid assets of around $14 million, strong assets and a highly regarded management team who have widely recognised skills in developing and operating junior gold projects.”
 
Jardine said the merger was one of several significant transactions completed by both companies in recent years and cemented the newly-merged entity’s position as an emerging gold producer.

He pointed to the acquisition of the Sandstone gold plant and completion of the Marda Feasibility Study and Mt Boppy studies as examples as well as other regional transactions, which have resulted in the company’s gold resource inventory climb from 0.3 million ounces to 1.6 million ounces in the space of two years.
 
“The merger represents the culmination of an active period for Southern Cross Goldfields and Polymetals and the beginning of a new phase of growth,” Jardine said.