Forrestania Resources Limited has announced its intention to acquire Kula Gold Limited in a deal worth $58.9 million.
The all-scrip acquisition has seen both companies enter into a bid implementation deed on 14 October.
Under the agreement, Forrestania will launch an off-market takeover to acquire all of Kula’s ordinary shares it does not already own, offering one fully paid ordinary share for every 5.6 Kula shares held.
Forrestania chair David Geraghty said the transaction marks a “natural progression” in bringing together two complementary exploration portfolios in one of Western Australia’s (WA) 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 grow,” Geraghty said.
“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 said that its directors believe that Forrestania’s bid provides its shareholders with the opportunity to “realise benefit” from its 80 per cent owned Mt Palmer gold project sooner, compared to Kula seeking to develop the project itself.
Kula chair Mark Stowell said the offer is a “highly value-accretive” transaction for the company and its 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,” he said.
The deal will consolidate explorations assets across one of WA’s richest gold corridors, giving Forrestania greater scale, operational efficiency, access to Kula’s cornerstone Mt Palmer gold project, and complementary exploration assets, such as Kula’s holdings in the Westonia and Boomerang prospects.
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