Genesis Minerals is set to acquire WA gold miner Dacian Gold in a scrip deal valuing the target at $111 million, with non-executive director Nev Power to resign should the purchase go ahead.
Both companies laid anticipated merger plans to the ASX this morning, with Genesis offering Dacian investors 0.0843 shares for each share held via an off-market takeover.
Mr Power's directorships have been under close scrutiny since pleading guilty to breaching Western Australia's strict travel policies at the peak of the pandemic.
Today's deal follows days of speculation regarding a potential deal between aspiring producer Genesis and struggling gold miner Dacian, whose share price fell more than 50 per cent after announcing plans to discontinue mining at its flagship operation last month.
Genesis’ proposal values Dacian shares at around 10.2 cents each, implying an overall deal value of $111 million.
Prior to entering a trading halt, Dacian shares last changed hands at around 9.2 cents.
Dacian has said its directors unanimously recommend shareholders accept the offer, in the absence of a better deal, which will need a 50 per cent minimum acceptance to proceed.
Major shareholder Perennial, which owns approximately 7 per cent of shares in the company, has already entered a binding pre-bid acceptance agreement for the deal.
To fund the acquisition Genesis is set to raise $100 million worth of institutional money via a two tranche share placement.
Shares were offered to investors at $1.205 apiece in the first round to raise $45.6 million, with the second to garner $54.5 million.
Majority of proceeds from the raise will go towards developing Genesis' Ulysses project.
Mr Finlayson said the transaction was a first step towards building a premium Australian gold miner.
“Sensible M&A is a key component of our multi-pronged growth strategy, and our team has a strong track record of executing transactions that deliver outstanding value for shareholders,” he said.
“Consolidation of the world-class Leonora District is a natural fit for Genesis.”
Should the deal go ahead, Genesis said it planned to start a strategic review of Dacian’s Mt Morgans gold operation in Laverton.
“We intend to conduct a strategic review of Mt Morgans over the next six months which will provide an opportunity to re-set strategy without immediate mining pressure in a challenging inflationary environment,” he said.
“Genesis will have the time and funding to grow the combined Resources and Reserves, optimise a new mine plan and await a more accommodative cost backdrop before an eventual re-start of full-scale operations.”
A potential deal with St Barbara is still on the cards, with the companies confirming discussions regarding a potential consolidation for its Leonora assets were ongoing.
Genesis Minerals shares were up 4.98 per cent to trade at $1.26.
Dacian Gold shares were also lifted on the news, trading 5.43 per cent higher at 9.7 cents.