Regis Resources (ASX:RRL) and Vault Minerals (ASX:VAU) announced on Tuesday that the two companies have agreed to combine in an all-share transaction that values the consolidated business at A$10.7 billion (US$7.7 billion).
Under the terms of the agreement, Regis will acquire 100% of Vault. Vault shareholders are to receive 0.6947 newly issued Regis shares for each Vault share they hold. Once the deal is completed, existing Regis holders will hold approximately 51% of the combined company, while former Vault investors will own the remaining 49%.
Market reaction in early trading reflected the deal dynamics: Vault shares rose by just over 5%, while Regis stock fell by nearly 4%.
The companies said their combined asset base comprises five operating mines, predominantly located in Western Australia, and that the merged group is expected to produce in excess of 700,000 ounces of gold annually. This production profile would position the combined entity as the third-largest primary gold producer listed on the ASX.
Regis and Vault provided consolidated financial metrics on a pro forma basis. The merged business would emerge with a debt-free balance sheet and approximately A$1.9 billion in combined cash and bullion. Annualised free cash flow is estimated at about A$1.7 billion, the companies said.
On the resource side, the combined company would hold 6.0 million ounces of ore reserves and 20.5 million ounces in mineral resources, figures the firms say support long-life operations across the portfolio.
Executives for both companies highlighted anticipated synergies from the consolidation. Those cited include procurement savings and corporate tax benefits in excess of A$500 million, together with the potential for improved access to capital and greater global relevance in markets for the enlarged gold producer.
Vault’s board unanimously recommended the transaction, subject to the absence of any superior proposal and to an independent expert concluding that the deal is in shareholders’ best interests. The transaction remains subject to shareholder, court and regulatory approvals.
The companies are targeting completion of the deal by the September quarter, contingent on receiving the required approvals.