Gascoyne Resources Limited (ASX:GCY) and Firefly Resources Limited (ASX:FFR) have entered into a binding Scheme Implementation Deed (SID), pursuant to which the two companies will merge by way of Scheme of Arrangement.
The Merger will combine two gold companies with complementary assets in the Murchison region of Western Australia, unlocking a number of synergies by leveraging Gascoyne’s gold mining expertise and available processing infrastructure at Dalgaranga, for the benefit of Firefly’s highly prospective suite of assets including its flagship Yalgoo Gold Project which is located only 110km by road from Dalgaranga.
The companies said the Merger will create a leading, regional gold production and development business and unlock significant value for Gascoyne and Firefly shareholders by integrating Yalgoo’s near surface higher grade deposits into the Dalgaranga production plan – providing opportunities to substantially extend and optimise the existing mining schedule, ultimately improving project economics.
The Firefly Board has unanimously recommended that Firefly shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to an independent expert opining that the Scheme is in the best interests of Firefly shareholders. The Firefly Board members, have confirmed their intention to vote in favour of the Scheme in respect of Firefly shares they hold or control, representing approximately 6.87% of Firefly’s issued shares, absent a superior proposal and subject to an independent expert opining that the Scheme is in the best interests of Firefly shareholders.
Major shareholders of Firefly representing a further 17.17%of Firefly’s issued shares, have entered into binding voting deeds with Gascoyne under which they agree to vote in favour of the Scheme, in the absence of a superior proposal and subject to an independent expert opining that the Scheme is in the best interests of Firefly shareholders.
Following Scheme implementation, Gascoyne will continue to be led by Managing Director and CEO, Richard Hay, with Firefly’s Managing Director and CEO, Simon Lawson, joining the Board of Gascoyne as a Non- Executive Director.
The Combined Entity is estimated to have a pro forma market capitalisation of $159.0 million, cash and equivalents of $33.0 million and bank debt of $17.5 million for a net cash position of $15.5 million as at March 31, 2021.
Gascoyne and Firefly also intend to undertake a demerger of their copper-gold and lithium exploration assets in the Paterson, Murchison and Forrestania regions of WA into a new energy metals focused exploration company, to be named Firetail Resources Limited, which intends to apply to list on the ASX
This Merger is a very exciting opportunity for Gascoyne and its shareholders and represents a key step forward in Gascoyne’s strategy of delivering value by extending mine life and increasing annual production at Dalgaranga,”Richard Hay, Managing Director and CEO, of Gascoyne, said.
“The integration of high-grade Yalgoo ore in our production plan moving forward has excellent potential to extend mine life, reinforcing Gascoyne’s position as a key gold producer in the Murchison region.
“Furthermore, the merger with Firefly will consolidate ~1,200 sq. kmof the Yalgoo and Dalgaranga greenstone belts under single ownership, significantly enhancing the exploration upside potential with over 100 high quality targets. Any discoveries can quickly be brought into production at Gascoyne’s high quality, low cost Dalgaranga processing plant.”