Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
From the perspective of a Vault shareholder, how would you view the proposed merger with Regis? Is it likely to be net positive in the long run and/or will it raise any short term issues/share price pressure leading up to the merger?
Hi Adrian,
For background Regis Resources (RRL) and Vault Minerals (VAU) have agreed to an all-scrip “merger of equals”, creating Australia’s third-largest listed gold producer with a combined market cap of ~$10.7bn. Vault shareholders will receive 0.6947 Regis shares per share in the deal.
The combined group is targeting production of 700koz+ p.a. from a 20Moz resource base across five assets, underpinned by a debt-free balance sheet with ~$1.9bn in cash and bullion—positioning the business to capitalise on the strong gold price.
The stocks have underperformed this week, following the typical path in most all-scrip deals. The same pattern played out with Northern Star Resources Limited (ASX: NST) when it acquired De Grey Mining — the acquirer sold off on the announcement and gradually recovered as the strategic rationale became clearer to the market.
We expect RRL will recover relative to its peers with the deal making sense longer term but obviously the gold price will play a major role in its absolute performance.
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