Forrestania Resources, a Western Australian exploration company, has announced a conditional scrip takeover bid for all the shares of Kula Gold.
The bid proposes an exchange of one Forrestania share for every 5.6 shares of Kula Gold.
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This offer values Kula at a premium of 41% to its ten-day volume-weighted average price through 10 October.
The directors of Forrestania have noted that the company’s bid offers Kula Gold shareholders the chance to benefit from the 80%-owned Mt Palmer Gold Project more quickly than if the company were to pursue the project’s development independently.
The board has unanimously advised accepting Forrestania’s offer, provided no superior proposal emerges.
The directors also plan to accept the offer for their own holdings.
Forrestania Resources and Kula Gold have entered into a bid implementation agreement (BIA).
Under this agreement, Kula Gold is restricted from seeking competing offers during the bid period.
Forrestania is required, in accordance with the terms of the options, to extend the offer for the exercise of existing Kula options and to provide compensation in the form of Forrestania shares for any outstanding options.
The offer is contingent upon standard conditions including a minimum acceptance requirement, the absence of specified occurrences, no material adverse changes and no regulatory actions.
Forrestania Resources chairman David Geraghty said: “This transaction marks a natural progression in bringing together two complementary exploration portfolios within one of Western Australia’s most prolific gold belts.
“It expands Forrestania’s regional presence and strengthens our position as a focused gold growth company with genuine scale and a clear pathway to growth. With gold prices remaining strong and investor interest building, this transaction underscores Forrestania’s capacity to execute strategic, value-accretive opportunities with speed, discipline and purpose.”
Kula Gold chairman Mark Stowell stated: “We believe this to be a highly value-accretive transaction for Kula Gold shareholders. The consolidation of Kula and Forrestania’s gold assets in the Southern Cross district advances the ambitions of both companies to become gold producers and will provide important economies of scale.
“In the absence of a superior offer, our directors are confident that this regional consolidation strategy will provide an optimal outcome for Kula Gold.”
In January, Kula Gold formed a joint venture to explore the Wozi Niobium Project in Malawi, holding a 75% stake, while African Rare Metals owns 25%.
