Doray Minerals and Mutiny Gold to merge

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Image credit: freedigitalphotos By: Boykung

Western Australia’s gold miners Doray Minerals Limited and Mutiny Gold Limited have announced a merger to form a leading mid-tier, high-grade gold company with an attractive and complementary portfolio of high-grade WA production, development and exploration assets and substantial growth prospects.

Image credit: freedigitalphotos By: Boykung
Image credit: freedigitalphotos By: Boykung

Doray’s takeover offer values Mutiny at $36 million and will see Mutiny shareholders receive 1Doray Minerals share for every 9.5 shares held, implying a value of 5.4c per Mutiny share, or about a 38% premium to Mutiny’s last closing price of 4.9c.

The merger is expected to provide the combined group with operational flexibility from two high-grade, low-cost production centres – Andy Well in the northern Murchison district and the Deflector project in the southern Murchison district of Western Australia – which combined are forecast to produce around 160,000oz AuEq (gold equivalent) per year from 2016.

Doray Chairman, Mr Peter Alexander, said the strategic merit of the combination is clear.

“The complementary nature of the two companies’ projects and the exceptional organic growth profile of the combined business will be a strong value driver for shareholders of both Mutiny and Doray. This acquisition will diversify Doray’s existing production centre at Andy Well with a high quality, development ready asset in Deflector, which once in production should double Doray’s annual production,” said Mr Alexander.

Adertisement

“We also look forward to welcoming Mutiny’s Non-Executive Chairman, Allan Brown, to the board of the combined group as a Non-Executive Director, where his strong, long term understanding of the project will prove valuable. Doray’s Board is confident that merging the assets of Doray and Mutiny, combined with the potential upside offered, places the combined group in a strong position to fill the growing investment void in the mid-tier ASX listed gold sector.”

Mutiny Chairman, Mr Allan Brown, said the transaction is compelling for Mutiny shareholders.

“In addition to a significant premium, the transaction provides Mutiny shareholders with the opportunity to become shareholders of a standout multi-mine, high-grade, gold-focused Western Australian mid-tier producer with strong growth prospects,” said Mr Brown.

“It allows our shareholders to continue to have a significant interest in the upside associated with the development of Deflector, while mitigating and diversifying the current development risks associated with being a single asset company. The Mutiny Board believes that this transaction is in the best interests of Mutiny and unanimously recommends it to our shareholders, in the absence of a superior proposal.”

The takeover offer for Mutiny shares is expected to open in mid-November and close in December.