The two have been in talks regarding Superior’s Plutonic gold mine in Western Australia following Catalyst’s acquisition of the neighbouring 1 million ounce Marymia via its takeover of Vango Mining.
While talks for an asset-level deal cooled, the two have agreed to merge via a Canadian plan of arrangement, which has the unanimous backing of the Superior board.
Superior shareholders will receive one Catalyst share for every 2.8 shares held, valuing Superior at C44c per share, a 62.8% premium to yesterday’s closing price.
The deal values Superior at $55 million. Catalyst has a market capitalisation of A$131 million.
Plutonic has a 3 million tonne per annum plant and 5.9Moz resource and is currently producing about 70,000oz of gold a year.
Catalyst managing director James Champion de Crespigny said the deal made sense for both companies.
“This is the transaction that Superior and Catalyst shareholders have been looking for,” he said.
“It is a logical consolidation that offers significant potential for operating synergies while also lowering risk.
“The combination of the large resources, big processing capacity and considerable exploration upside gives the combined group genuine scale, long mine life, strong cashflow and outstanding growth prospects, all in the heart of a world-class gold belt in WA. We think this will better appeal to all investors.”
Catalyst will aim to feed the underutilised Plutonic mill with high-grade ore from Marymia.
The Marymia resource includes a high-grade component of 517,000oz at 8.2gpt gold.
Champion de Crespigny said the Plutonic Gold Belt’s endowment of more than 14Moz was significant by any measure.
Superior was formed in 2016 to acquire Plutonic from Northern Star Resources for up to $66.2 million in cash and scrip.
Northern Star backed Superior’s C$28.5 million Toronto float in 2017 but has since sold out of the company.
Superior is trading near historical lows after a run of underperformance at Plutonic though its shares rose 14.8% overnight to 31c.
The company previously flirted with an ASX listing and CEO Chris Jordaan said it was a logical step via the Catalyst transaction.
“We believe the transaction will create a strong platform from which to advance the development of the Plutonic underground mine and surrounding open pit projects,” he said.
“Shareholders will also benefit from Catalyst’s strong Australian shareholder register, financial strength and portfolio of exploration projects.
“Catalyst will bring to Plutonic a team with international mining experience, a proven track record of exploration success and the financial resources to develop the district.”
The deal is subject to approval from at least two thirds of Superior’s shareholders, which are expected to hold up to 23% of the combined company.
Catalyst is already a gold producer via the Henty gold mine in Tasmania and has a large landholding in Victoria’s Bendigo Goldfield.
The company had A$18.6 million cash at the end of December.
A condition of the merger is that Catalyst raises at least $20 million within 30 days.
Canaccord Genuity and Argonaut Securities have been appointed as joint lead managers, with major shareholder Hancock Prospecting committing to participate.
