THE BOURSE WHISPERER: Westgold Resources and Metals X have executed a Merger Implementation Agreement.
The agreement is proposed to result in Metals X acquiring all of the issued shares in Westgold that it does not already own by way of Scheme of Arrangement.
Under the proposal Westgold shareholders will receive 11 Metals X shares for every 10 Westgold shares held at the record date for the merger.
Metals X has been a long-time major shareholder of Westgold and the two companies have decided a merger is the ideal way to arrange funding to bring Westgold’s project portfolio on stream.
“Westgold’s Board has held the view for some time that the company’s projects are not receiving appropriate recognition in the equity market and that there are significant funds required to bring both the Central Murchison gold project and the Rover 1 project into development and subsequently production,” Westgold Resources chairman Michael Atkins said in the companies’ announcement to the Australian Securities Exchange.
“This is an attractive proposal from Metals X, which brings the financial strength to rapidly progress these assets and expose Westgold shareholders to a diversified range of commodities as part of a larger, well-funded mining house.”
Atkins’ comments were supported by Metals X managing director Warren Hallam who said the merger was in-line with his company’s strategy of supporting its strategic investments through to production.
“The merger provides continued diversification and growth to our current portfolio and presents an excellent opportunity to leverage of Metals X’s financial and balance sheet strength to develop the Central Murchison gold project to the benefit of both companies’ shareholders,” Hallam said.
Metals X has been Westgold’s largest shareholder since 2007 and currently holds a shareholding interest of 26.98 per cent.
The Directors of both companies consider the proposed merger provides Westgold shareholders with an attractive premium for its shares, in the absence of a superior proposal.