Gold miners such as Northern Star Resources Ltd (ASX: NST), Regis Resources Limited (ASX: RRL), and St Barbara Ltd (ASX: SBM) may have dropped significantly lower on Monday after a fall in the gold price, but one of their industry peers bucked the trend with an impressive gain.
The Beadell Resources Ltd (ASX: BDR) share price was one of the best performers on the market on Monday, finishing the day 21% higher at 6.9 cents.
Why did the Beadell Resources share price rocket higher?
This afternoon the embattled gold miner advised that it has entered into a scheme implementation deed with US-listed peer Great Panther Silver Limited.
According to the release, the Scheme will see Great Panther acquire all of the issued ordinary shares of Beadell by means of a scheme of arrangement under the Australian Corporations Act 2001.
Key highlights of the transaction include the creation of a new emerging and growth-oriented precious metals producer with a strong balance sheet, robust growth profile, geographic diversity, and a diverse asset portfolio including three producing mines, an advanced stage project, and significant exploration potential.
In addition to this, management believes the transaction could result in an attractive re-rating.
The directors of Beadell have unanimously recommended that shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to the independent expert opining that the Scheme is in the best interests of shareholders.
Major shareholders Equinox Partners and Donald Smith & Co. have agreed to vote in favour of the scheme, in the absence of a superior proposal.
What offer has been made?
Under the terms of the Scheme, Beadell shareholders will receive 0.0619 common shares of Great Panther for each ordinary share of Beadell, resulting in the issuance of approximately 103.6 million Great Panther Shares.
This offer implies a consideration of A$0.0863 per Beadell share, which is a 51% premium to the last close price. It also implies an equity value for Beadell of approximately A$144 million.
This time last year Beadell Resources’ shares were trading as high as 21 cents, so longer term shareholders may be a touch disappointed to see an offer of 8.63 cents being made by Great Panther and recommended by management.
However, if they hold onto those shares instead of selling them then all is not lost and they could end up benefiting greatly from the growth potential of the two combined companies. Though, only time will tell if the combination is a success.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.