Echo Resources and Metaliko Resources are expected to announce a tie-up this week, after the two ASX-listed companies with assets in the eastern Goldfields region announced trading halts today.
Metaliko owns the Bronzewing gold processing facility in the Yandal belt, which has a milling capacity of 2 million tonnes of ore per annum, while Echo owns the Julius gold deposit and other land nearby.
A recent scoping study of Julius found it would return earnings before interest, tax, depreciation and amortisation of around $47 million.
The strategy would be to get that operation under way quickly and earn a cash return for further exploration.
The two companies are similarly sized, with Metaliko at a market capitalisation of $31.4 million and Echo at a market cap of $38 million.
Business News understands the transaction will likely be all scrip.
It comes about 21 months after Echo Resources shareholder Michael Ruane, currently executive director of Metaliko, attempted to spill the board of Echo.
A special meeting was held to deal with that move in February 2015, where the motions failed with about 32 per cent of votes.
Mr Ruane then upped his stake in Echo, held through intermediaries such as Kesli Chemicals to 17.7 per cent in April 2015.
That was reduced, however, to 7.6 per cent in July of this year.
Shares in Echo last traded at 22 cents each, while Metaliko traded at 7.1 cents.