Forrestania Resources Ltd (ASX: FRS) has agreed to buy the Edna May Gold Hub from Ramelius Resources Ltd (ASX: RMS) in a deal worth $300 million in cash and scrip.
Image source: Getty Images
Transformational gold opportunity
Under the deal, Forrestania will pay Ramelius $200 million in cash and $100 million in its own shares for the hub, which includes the 2.9 million tonne per annum Edna May mill, associated infrastructure, and the existing 945,000 ounce gold resource.
The company said the deal complements its Lake Johnston processing hub, which is currently undergoing refurbishment.
Forrestania Chair David Geraghty said regarding the deal:
This transaction upholds Forrestania's strategy to consolidate the proven and prospective gold assets in the Forrestania region. Approximately 12 months ago, Forrestania embarked on an aggressive M&A strategy to consolidate stranded high-quality gold assets and underexplored tenure surrounding Edna May. This strategy has been incredibly successful and set Forrestania up for today's acquisition. Forrestania believes it has the proven development and delivery team that is ready to refurbish, upgrade and commission the 2.9Mtpa Edna May Mill going forward. This work will be completed in conjunction with Forrestania's commissioning of Lake Johnston which is on-track for late 2026.
Forrestania said it was targeting a restart of the Edna May mill in the first half of 2027.
Forrestania shares were in a trading halt on Monday while the company completed a $300 million capital raise to fund the deal.
The company said it was targeting more than 6 million tonnes of ore processing capacity by the first half of 2027, with the Lake Johnston facility on track for commissioning in the fourth quarter of 2026.
Building a bigger WA footprint
The company added:
With Forrestania already holding significant tenure and JORC Resources surrounding Edna May, the acquisition builds-out its dual processing hub-and-spoke network, increasing Forrestania's operational flexibility and ensuring the right ore goes to the right mill. With a permitted and existing processing plant and associated infrastructure, Edna May presents a compelling near-term restart opportunity and allows Forrestania to avoid the approvals burden, development timeline and increased capital intensity associated with greenfield developments.
Forrestania shares, which last changed hands for 42.5 cents, are expected to remain in a trading halt until Wednesday, July 1.
The company is currently valued at $569.2 million.
Ramelius shares were up 3% on the news.
Ramelius said in a statement to the ASX, "the transaction provides Ramelius with an opportunity to crystallise value from a non-core asset and further focus resources on its core business'', while also retaining exposure to Edna May through its equity in Forrestania.
