Alkane, Mandalay agree to combine in ‘merger of equals’
Alkane Resources Ltd. [ALK-ASX] and Mandalay Resources Corp. [MNO-TSX, MNDJF-OTCQB] have agreed to combine in a “merger of equals” transaction. The two companies have executed a definitive agreement that will see Alkane acquiring all the issued and outstanding shares of Mandalay. Following completion of the transaction, the combined company will continue operating as “Alkane Resources,’’ and remain listed on the ASX. It will seek a listing on the TSX.
The transaction is designed to create a diversified Australia-centric gold and antimony producer with a portfolio of three operating mines. They include Alkane’s established Tomingley gold mine in Australia, which is currently ramping up after a major capital expansion. That operation will complement the well-established and stable production from Mandalay’s Costerfield underground gold/antimony mine (Australia) and the Bjorkdal underground gold mine (Sweden).
The combined company is expected to deliver forecast production of 160,000 gold-equivalent ounces (AuEq) in 2025, growing to over 180,000 AuEq in 2026. The combined company’s margins are expected to expand with 2025 all-in-sustaining costs (AISC) of US$1,760 per ounce, falling to approximately US$1,420 in 2026. The merged company is expected to benefit from a primary ASX listing valuation re-rate driven by GDXJ and potential ASX 300 index conclusions. “Further value creation should be unlocked through greater trading liquidity, a larger free-float and more diverse shareholder base as the combined company continues to grow
Under the terms of the transaction, Mandalay shareholders will receive 7.875 ordinary shares of Alkane for each ordinary share of Mandalay held immediately prior to the effective time of the transaction. Upon completion, former Mandalay shareholders and existing Alkane shareholders will own approximately 55% and 45%, respectively of the outstanding ordinary shares of the combined company, on an undiluted basis. The implied market capitalization of the combined company is estimated at $898 million. The executive team of the combined company will be Australia based and led by Alkane Managing Director Nic Farmer, an established executive with deep operational, management and corporate experience.
“The transaction presents a compelling opportunity for Mandalay shareholders to accelerate value creation through increased capital market scale, liquidity and a growing diversified asset base,’’ said Mandalay CEO Frazer Bourchier. “We are excited to have found a like-minded partner committed to the same principles.’’ Bourchier went on to say that the transaction aligns with Mandalay’s vision to create a mid-tier gold and antimony producer with mines in premier operating jurisdictions and with a strategy for continued growth.’’
Based on the Exchange Ratio fo 7.875 and the closing price of each company’s shares on the most recent trading day, the transaction implies a premium of 2.0% to Mandalay’s share price. Mandalay shares advanced on the news, rising 5.6% or 29 cents to $5.42. The shares trade in a 52-week range of $5.99 and $1.96.