Silver Lake Resources is set to acquire EganStreet Resources in a scrip deal worth $52 million, as the gold miner seeks to bolster its Deflector operations with a new ore source.
The deal values EganStreet at 40 cents per share, representing a 29 per cent premium to its last traded price of 31 cents.
Melbourne-based EganStreet’s flagship project is its Rothsay operation, which is located around 85 kilometres south-east of Silver Lake’s Deflector mine and processing facility in the southern Murchison region.
The bid has the unanimous support of EganStreet’s board as well as its major shareholder Lion Selection Group, which has a 16.2 per cent stake.
EganStreet completed a definitive feasibility study for Rothsay, which has resources of 454,000 ounces, in February.
Silver Lake managing director Luke Tonkin said the acquisition was consistent with the company’s strategy of utilising its established processing infrastructure at Deflector.
“The acquisition of EganStreet and its Rothsay Gold Project is consistent with Silver Lake’s strategy of creating new opportunities to compete for capital and maximising the value of the existing asset base,” Mr Tonkin said.
“Silver Lake’s nearby infrastructure at Deflector can unlock additional value at Rothsay and this is reflected in the share price premium offered to EganStreet shareholders.”
Earlier this year, Silver Lake completed a $615 million merger with Leigh Junk’s Doray Minerals.
Today, Silver Lake also revealed its June quarter figures, and recorded financial year sales of 171,322 ounces as its Deflector operations ramped up, at an average sale price of $1,754 per ounce, compared to 148,533oz in the 2018 fiscal year at an AISC of $1,367/oz.
Shares in Silver Lake were down 3.38 per cent to trade at $1.43 each at 2.55pm AEST.