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  • Genesis Minerals (GMD) is set to acquire fellow ASX-listed materials stock Dacian Gold (DCN) through a conditional off-market takeover offer with an implied value of $111 million
  • Genesis Minerals believes merging with Dacian Gold would consolidate their high-grade resources and offer a clear pathway to becoming a mid-cap Australian gold miner
  • Genesis is raising $100 million to fund exploration and a placement with Dacian which, when combined with a pre-bid acceptance deal with one of its shareholders, gives GMD a 16.6 per cent voting power in Dacian
  • The takeover offer needs at least a 50.1 per cent vote in favour and Dacian’s directors intend to recommend that shareholders accept the offer
  • GMD shares are trading 2.90 per cent higher at $1.24 and DCN is up 4.35 per cent and trading at 9.6 cents per share at 3:44 pm AEST

Genesis Minerals (GMD) is looking at acquiring fellow ASX-listed materials stock Dacian Gold (DCN) for an implied equity value of $111 million.

The acquisition will be in the form of a unanimously recommended conditional off-market takeover offer which will need at least a 50.1 per cent vote in favour.

Dacian shareholders will be entitled to receive 0.0843 GMD shares for every one DCN share they each hold.

Based on Genesis’ last closing price on July 1 of $1.21, the implied value of the offer consideration is 10.2 cents per Dacian share. This exchange ratio represents a 33 per cent premium to the companies’ five-day volume-weighted average price (VWAP) and a 28 per cent premium to the 10-day VWAP.

Both companies have gold assets in Western Australia with Genesis owning the Barimaia and Leonora operations and Dacian owning the Mt Morgans operation.

Genesis Minerals believes there’s a “strong strategic logic” in combining its assets with Dacian Gold as this would consolidate high-grade resources with existing infrastructure and give the merged companies a clear pathway to becoming a mid-cap Australian gold miner.

The combined group would reportedly have roughly 4.5 million ounces in resources in the ‘world-class’ Leonora district as well as the financial capacity, experience and expertise to expand the mineral resource and maximise value.

“This transaction is the first step towards our vision of building the premium Australian gold miner, targeting +300,000 ounces per annum of sustainable, high quality gold production,” GMD Managing Director Raleigh Finlayson said.

“The complementary nature of the combined company’s significant resources and infrastructure, exploration upside, and other regional growth opportunities make this the right deal for both Genesis and Dacian shareholders,” he added.

Capital raise

Genesis Minerals has also received firm commitments to raise up to $100 million through a two-tranche placement. A total of 83 million shares will be issued to institutional and professional investors at $1.21 per share.

The funds will go towards developing the Ulysses project and exploration for the combined group’s assets, working capital and $12.6 million will go towards the Dacian Placement.

Under the placement agreement with Dacian Gold, Genesis will subscribe for around 123.9 million DCN shares for $12.6 million. This will result in Genesis acquiring a 10.2 per cent interest in Dacian, thereby giving it a 10.2 per cent voting power in the takeover offer.

This placement will be complemented by a binding pre-bid acceptance agreement with a Dacian shareholder, Perennial Value Management, for around 76.4 million DCN shares. This will give Genesis a seven per cent voting power for a total voting power of around 16.6 per cent in Dacian.

As it stands, Dacian’s directors intend to recommend that shareholders accept the offer.

GMD shares were trading 2.90 per cent higher at $1.24 and DCN was up 4.35 per cent and trading at 9.6 cents per share at 3:44 pm AEST.

GMD by the numbers
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