Lion Selection and Catalpa Resources have signed a Merger Implementation Agreement (MIA) to create an Australian mid-tier gold producer.
Managing director of Lion Selection Robin Widdup told MINING DAILY there was a real gap in the Australian gold sector for a mid-size gold company producing top quality material.
“The newly formed mid-tier gold producer will construct an open-pit gold mine between Kalgoorlie and Perth that will produce around 100,000 ounces each year for the next 8 to 10 years,” Widdup said.
“The new mine will generate between $80 and $100 million in free cash flow each year and will create hundreds of jobs in both construction and operation.”
The Merger will be implemented via Scheme of Arrangement of Lion shareholders, pursuant to which Catalpa will acquire all of the shares in Lion.
Under the Scheme, Lion shareholders will receive one Catalpa share for each Lion share they hold (post Catalpa undertaking a 1 for 11 share consolidation).
In conjunction with the Scheme, Lion will first undertake a demerger of its investment assets and undertake a 10c per share cash distribution to its shareholders.
Widdup said Lion shareholders should see a re-rating once the new open-pit mine is running.
“Lion shareholders are going to receive a piece of paper in September with a nominal value of 65c. We are forecasting a re-rating of somewhere between $2 and $4 once the mine is open,” he said.