Brightstar Resources chief operating officer Dean Vallve, managing director Alex Rovira, non-executive director Jonathan Downes, and chairman Greg Bittar with the company's first gold bar on March 6. Credit: Brightstar Resources/Supplied
Brightstar Resources has launched an off-market scrip takeover offer for fellow northern Goldfields producer Linden Gold Alliance as it pushes along a path to become a 100,000 ounces per annum operation.
Brightstar told the ASX on Monday it and the unlisted Linden had entered into a bid implementation agreement which would result in Brightstar acquiring all of the issued ordinary shares and options in Linden.
Under the terms of the deal, each Linden shareholder would receive 6.9 Brightstar shares for every one Linden share held.
They would also get 6.9 Brightstar options for every one Linden option held, equating to an implied offer price of 11.04¢ per share.
Brightstar said the offer implied an undiluted equity value for Linden of about $23.7 million, with the merged company to be 62 per cent owned by Brightstar shareholders and 38 per cent by Linden shareholders.
Linden’s directors had unanimously recommended shareholders and option holders accept the offer, in the absence of a superior proposal.
Brightstar said St Barbara had entered into a pre-bid acceptance agreement with Brightstar under which it had agreed to accept the offer in respect of its existing 19.8 per cent holding in Linden.
It also said Linden’s major shareholders and their associated entities — representing 47.5 per cent — had each separately advised the Linden board they intend to accept the offer.
Brightstar managing director Alex Rovira said the move aligned with the company’s strategy of becoming a mid-tier gold producer in the near term.
“This combination will create a gold producer and development company with a material resource base, synergistic operations, strengthening in-house operational expertise and a strong balance sheet that will drive development and growth,” he said.
Linden managing director Andrew Rich said Brightstar’s team and assets were highly complementary to Linden’s, and Linden believed the combination would unlock material synergies to the benefit of all shareholders.
“The offer provides Linden shareholders with a range of benefits, including exposure to a liquid, growing ASX-listed gold producer, a strengthened balance sheet and the ability to utilise Brightstar’s existing infrastructure and resource base,” he said.
Post-consolidation the executive team will be led by Mr Rovira as managing director, with Mr Rich and Linden’s Ashley Fraser to be appointed as executive director and non-executive director, respectively.
Also, natural resources industry professional Richard Crookes will be appointed as non-executive chairman.
Linden owns and operates the Second Fortune underground gold mine south of Laverton, which has produced more than 13,000oz so far this financial year, with ore processed through Genesis Minerals’ Gwalia processing facility.
Linden also owns the development-stage assets of Jasper Hills, which has a mineral resource estimate of 4.9 million tonnes at 1.8g per tonne for 293,000oz of gold.
“As outlined in Brightstar’s Jasper Hills scoping study, Jasper Hills has the potential to deliver 35,000oz per annum production to the Brightstar production profile, with an initial mine production target of 2.4Mt at 1.84g/t for 141,958oz mined over approximately 3.75 years,” the company said.
“The successful completion of the offer will see Linden’s existing operations at Second Fortune and development-ready Jasper Hills project combined with Brightstar’s existing Menzies and Laverton gold projects to position Brightstar to become a low capex, meaningful gold producer.”
Brightstar this month poured first gold from its Selkirk deposit, within the wider Menzies gold project, after mining ore in partnership with Kalgoorlie-Boulder mining services firm BML Ventures and having it processed at Gwalia.
Brightstar said it had total unreconciled gold production of 8049oz from 43 gold dore bars produced in the campaign.
The company said it expected the final financial return to exceed expectations, given the Australian gold price had been trading at a record level of about $3300/oz, versus the the joint venture’s model of $2850/oz.
Linden’s consolidation into Brighstar follows its failed partnership with Matsa Resources, which was finally terminated in December after more than a year of issues.
Matsa this month announced it would partner with BML Ventures to develop the Devon open-pit gold mine south of Laverton.
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