GBM to merge with Canada's WCB

PERTH (miningweekly.com) – Gold developer GBM Resources has announced a merger with Canada’s WCB Resources, creating an Australasia-focused gold development and exploration group.

Under the terms of the proposed merger, WCB shareholders would receive eight GBM shares for each WCB share held. The Canadian firm’s shareholders will hold a combined 36% interest in the enlarged company and GBM shareholders the balance if the deal is completed.

GBM owns the Mt Coolon gold project, in Australia, which has a measured resource of 6 200 oz and an indicated resource of 173 000 oz, while WCB owns the Misima Island project, in Papua New Guinea, which hosts an indicated resource of 637 000 oz and an inferred resource of 186 200 oz.

“The complementary nature of the two companies’ projects creates a strong platform for both companies’ shareholders to benefit from a substantial value uplift from a significant increase in combined gold resources at Misima and Mt Coolon and the ability to step up exploration within the group’s extensive landholding,” said GBM executive chairperson Peter Thompson.

He added that GBM believed the transaction was in the best interest of shareholders, and has recommended that shareholders accept the proposed merger, in the absence of a superior offer.

The new entity will be fully funded to start gold production at Mt Coolon this year and to support ongoing exploration strategies at both projects.

A previous scoping study into the Eugenia deposit at Mt Coolon demonstrated that a 16-month small-scale heap-leach operation had the potential to generate a strong positive cash flow, with recovered gold ounces totalling 32 588 oz at a C1 cost of $848/oz. Capital expenditure is estimated at $8.3-million.

The Eugenia heap leach is one of three near-term gold production scenarios under review at Mt Coolon and is estimated to contain 315 000 oz of gold.

WCB president and CEO Cameron Switzer has, meanwhile, said the Canadian firm considered the merger an "outstanding opportunity" for existing shareholders.

“The attractiveness regarding the focus on near-term production and cash flow from Mt Coolon underpins the group moving forward. The significant exploration upside identified at both the Misima and Mt Coolon project areas has the potential to ensure that the merged company has an exciting future moving forward.”

Besides shareholder and regulatory approvals, the transaction is also subject to GBM completing an A$8.5-million debt funding agreement with National Federal Capital.