Less than a month after agreeing to non-binding indicative terms for a scheme of arrangement, Brightstar Resources has entered into a scheme implementation deed with Aurumin to consolidate the central Sandstone region in Western Australia.
Under the share scheme, Aurumin shareholders will receive one Brightstar share for every four Aurumin shares held on the scheme consideration’s record date.
This represents an implied value of approximately $0.12 per Aurumin share and Aurumin’s undiluted equity value of $60 million.
Brightstar and Aurumin have also agreed to an option scheme, in which the outstanding Aurumin options will be exchanged for new Brightstar options at the same exchange ratio as the share scheme.
If the merger is successful, a consolidated greater Sandstone gold project would be created in the Goldfields region of WA, supported by combined mineral resources of 3.9 million ounces of 1.5 grams per tonne of gold.
“This is a compelling transaction for all stakeholders, and we believe that combining Aurumin and Brightstar represents a unique opportunity to build a Western Australian gold business of genuine scale with demonstrable upside that also de-risks future development activities and operations at Sandstone,” Brightstar managing director Alex Rovira said.
“Consolidation in Sandstone has been widely acknowledged within mining industry for some time as a transaction which has the potential to create an asset base of significant scale and unlocking value for the shareholders of both Brightstar and Aurumin.”
To unlock additional financial flexibility and balance sheet strength to fast-track exploration and development activities at Sandstone, Brightstar is undertaking an equity raising to raise $50 million.
The placement, which was conducted at $0.48 per share, has already received binding commitments from professional and sophisticated investors.
The Aurumin board has unanimously recommended that its shareholders and option holders vote in favour of the schemes, in the absence of a superior proposal and an independent expert concluding the schemes are in their best interest.
“The transaction announced today is an exciting development as we believe that combining Brightstar and Aurumin will underpin the mining future of this important Sandstone region,” Aurumin managing director Daniel Raihani said.
“Given our adjacent mineral resources, this transaction makes good commercial sense for us and it’s fantastic that we have now been able to agree terms to make this consolidation a reality.
“In addition to delivering a significant premium, the transaction, if approved and implemented, will allow Aurumin shareholders to retain a significant ongoing exposure to the development of the combined Sandstone gold project, as part of a larger resources group holding multiple projects, which should deliver substantial synergy benefits and reduced risks associated with holding a single project.”
Once the share and option schemes and $50 placement are completed, existing Brightstar shareholders will hold approximately 82 per cent of the combined group, and Aurumin shareholder will hold the balance.
Subject to several conditions such as court and shareholder approval, the Brightstar– Aurumin is expected to be implemented in late October.
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