Two local gold hopefuls with interests in a Cambodian project have announced a merger, with Emerald Resources to buy Renaissance Minerals in a deal valued at about $40 million.
Both companies hold a stake in the Okvau gold project in eastern Cambodia, with Emerald to earn 51 per cent by funding and completing a definitive feasibility study.
The deal will be an off-market takeover, with Emerald offering 1.55 shares for each Renaissance share it picks up, in a scrip transaction.
That would value Renaissance at 7 cents per share, a 27 per cent premium to its 30-day weighted average.
The first few steps of the plan are already well in train, with the Renaissance board recommending shareholders accept the deal in the absence of a superior offer, and securing commitments for about 34 per cent of shares so far.
BDO has been commissioned to provide an independent report on the offer, Steinepreis Paganin is acting as legal adviser to Emerald, while Euroz Securities and Gilbert + Tobin are advising Renaissance.
Emerald also has a gas interest, earning a 5 per cent royalty from production from various leases in Kentucky, which the company had previously operated through a subsidiary.
Last year, Emerald reconsidered its strategy, culminating in the initial deal with Renaissance earlier this year.
The new company’s board will be chaired by Emerald chairman Simon Lee, while former Regis Resources operations director Morgan Hart, who is now managing director of Emerald, will continue in that role.
Renaissance managing director Justin Tremain will be offered a role as executive director in the new entity.
Renaissance chairman Hamish Halliday said the deal was the natural progression for both companies.
“A successful merger will create an emerging gold producer with a highly credentialed management team, a strong balance sheet and a company very well positioned to deliver growth for all shareholders," he said.
Shares in Emerald were up 7 per cent to 4.8 cents each at the time of writing, while Renaissance was up 9 per cent to 6.2 cents per share.