It's a big day in the S&P/ASX 200 Index (ASX: XJO) gold stock space today, with industry heavyweights Regis Resources Ltd (ASX: RRL) and Vault Minerals Ltd (ASX: VAU) announcing their intentions to merge.
The combined company will have a market capitalisation of some $10.7 billion at current share prices.
Together the ASX 200 gold stocks expect to produce more than 700,000 ounces of gold a year from five Western Australian operating hubs. Their collective Ore Reserves amount to 6.0 million ounces with 20.5 million ounces in Mineral Resources.
Here's what's happening.
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Two ASX 200 gold stocks to become one
This morning Regis Resources and Vault Minerals revealed they have agreed to a "merger-of-equals" via a Vault scheme of arrangement which will see Regis acquire 100% of Vault's shares.
Vault shareholders will get 0.6947 new shares in Regis for each Vault share they hold.
Both the Vault board and the Regis Resources board unanimously endorsed the scheme, barring a superior proposal emerging. The merger remains subject to shareholder and other regulatory approvals.
If the scheme is implemented, Regis shareholders will own around 51% and Vault shareholders will own approximately 49% of the combined company.
The ASX 200 gold stocks said efficiencies from the merger could realise more than $500 million of tax benefits and lower the cost of capital for the combined mining company.
They forecast combined annualised free cash flow of $1.7 billion and a balance sheet with $1.9 billion in cash and bullion, no drawn debt, and $300 million in available debt facilities.
The combined ASX 200 gold stock will be led by Russell Clark as non-executive chairman and Jim Beyer as managing director and CEO. The new company's board of directors will be comprised of four directors from each of the current Regis Resources and Vault Minerals boards.
What did Regis Resources and Vault Minerals management say?
Commenting on the ASX 200 gold stocks' merger intentions, Regis Resources CEO Jim Beyer said, "This merger creates Australia's third largest primary ASX-listed gold producer, which demands global recognition."
Beyer added, "The combined company is exceptionally well-positioned to deliver long term value and enhanced capital returns for our shareholders."
Vault Minerals CEO Luke Tonkin said:
Vault's portfolio, anchored by the King of the Hills operation currently undergoing a significant mill expansion, brings long-life, high-quality assets and a strong financial position to the merger.
By combining these strengths with Regis' proven operational and exploration capability, the merged company is better positioned to deliver sustained production, enhanced reserve replacement and long-term value creation across gold price cycles.
Vault Minerals shares are up 4.4% in morning trade following the merger news, changing hands for $4.70 apiece.
Regis Resources shares are down 4.2% at $6.87 each.
