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News.com.au
28-04-2025
- Business
- News.com.au
The latest billion dollar gold merger shows the M&A tap continues to flow
Alkane Resources has announced a merger of equals with TSX-listed Mandalay Resources Will create a $1bn player with 180,000ozpa gold equivalent production and $188m in cash That makes the combined group a legitimate contender in future M&A processes The newest billion dollar gold player on the ASX is setting itself up to build a stronger hand in the poker game brewing over Australia's gold scene. Alkane Resources (ASX:ALK), the owner of the Tomingley gold mine in New South Wales, and TSX-listed Mandalay Resources, which owns the Costerfield mine in Victoria and Björkdal mine in Sweden, announced the merger of equals yesterday. The combination, which will create a pro-forma $1.013bn gold producer with a primary Aussie listing, is the latest to emerge as gold prices bounce along at a near record price of US$3300/oz. While it's been in the works for months, the deal comes after a flood of activity such as Northern Star Resources' (ASX:NST) $6bn takeover of Hemi gold project owner De Grey Mining, Ramelius Resources' (ASX:RMS) and Spartan Resources' (ASX:SPR) proposed $4.2bn merger, Gold Road Resources (ASX:GOR) rebuffing a $3.3bn takeover offer from its Gruyere JV partner Gold Fields and a host of project level acquisitions of assets spat out by overstuffed majors. After the deal clears shareholders and foreign investment approvals, the combined entity will have a pro-forma production profile of 160,000ozpa gold equivalent rising to 180,000ozpa from 2026, with $188m of combined cash in the bank. While their dispersed operations may have few obvious synergies, that as well as the enhanced liquidity will provide Alkane with inclusion to various indices including the GDX and ASX 300 – bringing passive investment flows into play – and make the company a more meaningful player when it comes to competitive M&A. "So that's one aspect that allows us to do inorganic growth," Alkane MD Nic Earner, who will become MD of the combined entity, said. "The second thing that allows us to do inorganic growth is … some of these non-funded developers, we could if we so chose pick one of those up and have a pathway through to development pretty easily. "Whereas if you pick that up as a smaller company, people are like, 'oh, you're going to have to do some sort of dilutive raising'. So it opens both of those avenues should the board choose to take them." Exploration muscle Earner added that each of the Tomingley, Björkdal and Costerfield assets, the latter also the largest antimony producer in the West, all have opportunities to extend their lives and expand their production profiles via exploration and infrastructure developments. While that may be in the order of 15-20%, Earner says at current gold prices, that is significant in terms of the cash they can generate. There are already some obvious takeover targets once the deal completes. Alkane already holds ~6% of WA gold developer Medallion Metals (ASX:MM8), while Mandalay's Costerfield sits up the road from gold-antimony exploration darling Southern Cross Gold (ASX:SX2) in Victoria. Earner and Mandalay president Frazer Bourchier acknowledged those would be companies in the "upper quartile" of opportunities to look at. However, they said future M&A decisions, if any, would be up to the miner's incoming board, which will include two nominees from Alkane (including Earner), three from Mandalay and an independent chair in Barrick director Andy Quinn. Gold prices could, ironically, become a barrier to future deals as developer valuations follow producers higher. "You can go back to the development path of Bellevue for instance. They were very open to a sale transaction but the valuations they received meant that they were pushed into a development pathway," Earner noted. "You can have the best will in the world but just not agree on value. And I'm not saying that's with one of those other parties, what I'm saying is that it's a difficulty at the moment as everybody and their shareholder base hopes for more value to come." But the desire to build scale and cash flows at a time of record gold prices does mean more consolidation is on the horizon. "What (the gold price is) really doing is differentiating between those who are generating cash and those that aren't. And that drives the M&A landscape a lot," Earner said. "In our particular case, if you look at the amount of free cash that we'll be generating and you look at where our market cap is, you can see a lot of value and a lot of upside in our stock. "I do expect consolidation in the sector." Bourchier said there remained undervalued gold stocks in the market, with a sense of disbelief keeping the valuations of explorer and developers suppressed, while he shares the opinions of bullish commentators that generalist money had not yet flowed into the gold equity market. "Even irrespective of all that scale and size matter in this industry, getting that capital market scale moving up a level will get us more attention," he added. Antimony kicker Mandalay, which has seen its shares lift 115% in the past year in Toronto, has received a two-pronged boost in recent times. It's on track to produce 85,000-95,000 gold equivalent ounces this year. That includes 1050-1150t of antimony from Costerfield, the only material commercial producer of the critical mineral outside China, Russia and Tajikistan. That's been a massive bonus, with export controls from China in September last year, followed by a complete ban on exports to the US in December, sending prices up from ~US$13,000/t at the start of 2024 to over US$55,000/t today. It makes Costerfield a strategic asset for the West, with the price rise seeing the share of revenue generated by the commodity at the mine lift from around 10% to ~30%. For the combined group it will make up around 12-15% of revenues, Earner said. Bourchier stressed that the company would be a gold company with an antimony "side angle". Yet the strategic significance of the Costerfield asset remains stark. How Costerfield works is that half of its gold is recovered from a gravity circuit, and is sent to Melbourne for refining. The other half reports to a concentrate with both gold and antimony which is shipped to China, Oman and Mexico for processing. Used in artillery and solar panels, the commodity became a key talking point after China issued export controls, ostensibly in response to US restrictions on the export of semiconductor parts and technology. "Russia, Tajikistan and China produce 87-90% of all the world's antimony. That means, ironically, Costerfield, Mandalay, and now MergeCo, are the largest producer of antimony in the Western world," Bourchier said. "There's a lot of mom and pops in Bolivia, a little bit in Turkiye, some in Peru, but as far as the largest recognised producer – not companies that plan or hope to produce like maybe Southern Cross or Perpetua or Larvotto – but actual producer for the last 15 years, is us. "That's partly a reflection of how limited that world is, and because of the strategic angle of antimony. "Because of the geopolitical situation it's given an extra amount of attention to our company, and not just because of the revenue and the extra cash we generate from that, but also because of the importance and significance of that critical mineral." Earner, who previously worked as a general manager at developer Larvotto's Hillgrove site, said the combined company would maintain the market knowledge built by Mandalay, with key executives including chief operating officer Ryan Austerberry to join the enlarged group.
The Market Online
28-04-2025
- Business
- The Market Online
Alkane to merge with Canadian Mandalay in golden bid for ASX300 status
By: Sonia Madigan Alkane Resources (ASX:ALK) and Mandalay Resources Corporation (TSX:MND) will merge their companies and three operating mines in a bid to see their gold production increase to more than 180,000 ounces next year and push for a market cap above A$1 billion. The 'merger of equals' transaction has been declared through a 'definitive arrangement agreement' which will see Alkane acquire all the shares of Mandalay. The name and ASX-listing Alkane Resources will stay and the merged company will seek a new listing on the TSX. The deal to drive market cap above $1 billion Under the arrangement, Mandalay shareholders will receive 7.875 shares of Alkane for each Mandalay share held. The companies reported it was about increasing scale and trading liquidity, with the implied market cap of the combined entity expected to be A$1,013 million. With that, the companies are hoping to make the ASX300. The initial production goal for this year will be 160,000 g/t. Alkane trading up on recent intercepts Prior to this announcement, Alkane had a market cap of $454 million and last closed at 75c – up from 61c since April 7, when it announced it had struck high grade gold intercepts in drilling at Tomingley Caloma and Roswell in Central West NSW. These grades included 3.1 metres at 196.95g/t from 115m deep, including a metre at 589g/t from 116m down. Combined entity to be Australia-based The executive team will be Perth-based, led by Alkane's Managing Director Nic Earner. Today's ASX announcement said the transaction would create 'a diversified Australian centric gold and antimony producer with a portfolio of three operating mines and a strong balance sheet'. 'Alkane's established Tomingley gold mine (Australia), currently ramping up after a major capital expansion, will complement the well established and stable production from Mandalay's Costerfield underground gold/antimony mine (Victoria, Australia) and the Björkdal underground gold mine (Sweden).' Taking Alkane to a 'new level' Alkane's Nic Earner said the deal would 'take Alkane to a new level, bringing together two companies with complementary assets and a shared vision for growth'. 'Mandalay's two high-quality mines match the attributes of Tomingley: a proven history of consistent production, cash generation and exploration upside,' he said. 'The combination of assets, leadership, andsupportive long-term shareholders enhances our scale and financial strength, and positions us well to continue to pursue additional growth opportunities.' Mandalay's CEO and President Frazer Bourchier said the company had the support of its major shareholders. The combined entity will have a cash balance around C$166 million. Join the discussion: Find out what everybody's saying about this stock on the Alkane Resources Bullboard, and check out the rest of Stockhouse's stock forums and message boards. The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.
Yahoo
28-04-2025
- Business
- Yahoo
Australia's Alkane and Canada's Mandalay to merge to create diversified mining company
Australian mining company Alkane Resources has signed a definitive arrangement agreement with Canadian miner Mandalay Resources for a "merger of equals" to create a diversified gold and antimony producer. The estimated implied market capitalisation of the merged company is C$898m ($647.8m). The merged entity will operate under the name Alkane Resources, maintaining its Australian Securities Exchange (ASX) listing and aiming for a Toronto Securities Exchange (TSX) listing. Under the agreement, Alkane will acquire all issued and outstanding common shares of Mandalay through a court-approved plan of arrangement. Mandalay shareholders will receive 7.875 Alkane shares for each share held, resulting in a 55% and 45% ownership split between former Mandalay and current Alkane shareholders, respectively. The merged company will have a combined forecast production of approximately 160,000 gold-equivalent ounces (oz) in 2025, potentially growing to more than 180,000oz in 2026. The combined company will benefit from the operations of three mines, comprising Alkane's Tomingley gold mine in Australia, in addition to Mandalay's Costerfield underground gold/antimony mine in Australia and the Björkdal underground gold mine in Sweden. The merged entity is expected to have improved margins and capital market positioning. It will possess a strong balance sheet, featuring a projected cash balance of C$167m as of 31 March 2025, enabling it to pursue both organic and inorganic growth opportunities. The combined company's Board of Directors will include nominees from both Alkane and Mandalay, with Andy Quinn serving as the new independent chair. The headquarters will be in Perth, Australia. Upon closing, Alkane's Nic Earner will continue as managing director, with James Carter as chief financial officer. Mandalay's Ryan Austerberry and Chris Davis will join Alkane's senior operational management, ensuring continuity at the Costerfield and Björkdal mines. Alkane Nic Earner managing director said: "The transaction will take Alkane to a new level, bringing together two companies with complementary assets and a shared vision for growth. Mandalay's two high-quality mines match the attributes of Tomingley: a proven history of consistent production, cash generation and exploration upside. 'The combination of assets, leadership and supportive long-term shareholders enhances our scale and financial strength, and positions us well to continue to pursue additional growth opportunities.' The merger is expected to close in the third quarter of 2025 (Q3 2025), subject to regulatory and shareholder approvals. Mandalay president and CEO Frazer Bourchier said: 'The transaction presents a compelling opportunity for Mandalay shareholders to accelerate value creation through increased capital markets scale, liquidity and a growing diversified asset base.' "Australia's Alkane and Canada's Mandalay to merge to create diversified mining company" was originally created and published by Mining Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
Reuters
27-04-2025
- Business
- Reuters
Australia's Alkane to acquire Canada's Mandalay in $358 million merger deal
April 28 (Reuters) - Australia's Alkane Resources ( opens new tab will acquire Canada's Mandalay Resources ( opens new tab in an all-share deal valued at A$559.1 million ($357.8 million), the companies said on Monday, creating a combined diversified gold and antimony producer. The merged entity will have an implied market capitalization of A$1.01 billion. The tie-up joins a wave of consolidation sweeping the global gold sector as miners capitalize on bullion prices hovering near record highs to strengthen their portfolios and operational footprints. Under the transaction, described as a "merger of equals," Mandalay shareholders will receive 7.875 Alkane shares for each Mandalay share, giving them about 55% ownership of the combined entity. The merged company expects to produce 160,000 gold-equivalent ounces in 2025, rising to over 180,000 ounces in 2026, operating three established mines - two in Australia and one in Sweden. Current Alkane Managing Director Nic Earner will lead the Australian-headquartered company, which will combine Alkane's recently expanded Tomingley gold operation with Mandalay's Costerfield gold-antimony mine in Australia and Björkdal gold mine in Sweden. ($1 = 1.5623 Australian dollars)
