By Rhiannon Hoyle
Australian gold producers Red 5 and Silver Lake Resources Monday said they have agreed to merge in a deal the companies say will create a new mid-tier gold company and give them a good footing for growth.
In a joint statement, the companies said Silver Lake shareholders will receive 3.434 Red 5 shares for every Silver Lake share they hold. Red 5 shareholders will own nearly 52% of the merged group, with Silver Lake shareholders owning the rest.
Red 5’s Russell Clark will be chairman of the combined company and Luke Tonkin, managing director of Silver Lake, will be chief executive.
“The increased scale, diversification and financial strength of the new company that will be formed via this transaction will be primed for continued strong cash flow generation and further growth,” Tonkin said in the statement.
The companies said the combined group would be able to produce roughly 445,000 troy ounces a year.
Silver Lake owns roughly 12% of Red 5’s shares and, following the deal, “Silver Lake’s shareholding in Red 5 will either be monetized or cancelled in accordance with” Australian law, the companies said.
Write to Rhiannon Hoyle at [email protected]
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