Expanding its footprint into the Murchison gold district of WA, Ramelius Resources (ASX: RMS) will takeover Spartan Resources (ASX: SPR) and its nearby Dalgaranga project to become a $4.2 billion gold mining heavyweight.
Dalgaranga includes the standout, high-grade Never Never and Pepper deposits - which aim to offset recently announced lower production levels at Ramelius’ Mt Magnet operations - news that tanked its share price almost 20% in a day.
The binding takeover agreement sees Ramelius acquire each Spartan share it doesn’t already own for 25c in cash and 0.6957 new Ramelius shares. This gives the explorer an implied value of $2.4 billion at $1.78 per share.
That’s a nifty 27.5% premium to the 30-day volume-weighted average price (VWAP) - lower than WA’s most recent merger when Northern Star Resources (ASX : NST) jumped on De Grey Mining (ASX : DEG) and its world-class Hemi 11Moz+ gold deposit with a $5 billion bid at a 44% premium.
Never Never never in doubt
The deal comes as no surprise, when Ramelius - which produces gold from deposits around its Mt Magnet mining hub - bought an 8.9% slice of Spartan in June last year, upping it to a 19% stake in December as the junior rattled the tin to increase exploration efforts around Never Never.
Ramelius CEO Mark Zeptner was coy about takeover rumours at the time, saying the miner had “no current intention to acquire control or make a takeover offer for Spartan”.
Until now that is - and just as gold spot prices tipped over the milestone US$3,000/oz mark over the weekend.
The mid-tier goldie will now have global resources of 12.1 million ounces of gold (Moz), with 2.6Moz in reserves and tips itself to become a 500,000ozpa producer in five years’ time.
Zeptener says the takeover will see Ramelius’ Mt Magnet production hub supercharged by the integration of Spartan’s Dalgaranga resources.
“The combination will see Mt Magnet deliver higher ounces, at higher grades, with higher margins," Zeptener says.
“With the ‘Spartan effect’, Ramelius has a vision for the combined group to be a +500koz/pa producer in FY30.
“We are also excited to see what the ongoing exploration efforts at Dalgaranga can deliver. Combined Group’s shareholders.
Spartan CEO Simon Lawson will join the Ramelius board as deputy chair. He says he will be “providing direction into a renewed exploration focus at a number of Ramelius' existing assets as well as the development and growth of the high-grade Dalgaranga orebodies.”