PERTH: Genesis Minerals Ltd. and Vault Minerals Ltd. announced Tuesday they have entered into a binding agreement to merge, creating Australia’s third-largest gold producer in a deal valued at approximately $12.6 billion.
The merger comes after rival bidder Regis Resources Ltd. withdrew from the contest, concluding the terms required to match Genesis’ offer did not meet its return thresholds. Regis will receive a break fee of approximately $50.7 million as a result, a statement said.
Under the scheme of arrangement, Vault shareholders will receive 0.7629 new Genesis shares plus $0.475 in cash for each Vault share held. The offer values Vault at $5.6 billion and represents a 15.7% premium to its closing price on July 3, when Genesis first unveiled its proposal.
The combined entity will have a pro-forma market capitalization of $12.6 billion and annual gold production of 600,000 to 700,000 ounces, all from operations in Western Australia. Genesis shareholders will own 59.8% of the merged group, with Vault shareholders holding the remaining 40.2%.
Genesis Executive Chair Raleigh Finlayson described the combination as “a truly logical combination of assets” that would create the third-largest Australian gold producer. Finlayson will become managing director of the merged group, with Matt Nixon continuing as CEO and Morgan Ball as CFO.
The companies estimate $2 billion in post-tax synergies, including $1.5 billion over ten years, driven by the proximity of their operations in the Leonora-Laverton gold district. Key savings include $715 million in growth capital expenditure avoidance by processing Genesis’ Tower Hill ore through Vault’s King of the Hills mill rather than building new processing facilities.
The merged group will have 33.6 million ounces of mineral resources and 9.4 million ounces of ore reserves. Russell Clark, current Vault chairman, will serve as non-executive chairman of the new entity, with the board comprising four Genesis directors and three Vault directors.
Vault Managing Director Luke Tonkin said the proposal “reflects the quality of Vault’s portfolio and the strategic value of our Leonora assets.” The scheme requires approval from Vault shareholders at a meeting scheduled for September or October.
