Kin revealed this morning that it had acquired 20 million shares via on-market purchases this month.
Dacian shares have traded in a range of A7.4-10c in September, meaning the maximum Kin could have paid for its stake was $2 million.
Kin had cash of $3.6 million at the end of July but recently raised $13.7 million of a possible $20.4 million sought in an entitlement offer.
The on-market purchases give Kin a 1.63% stake in Dacian.
On Friday, Raleigh Finlayson’s Genesis Minerals assumed control of Dacian under a scrip takeover launched in early July.
Genesis’ stake in Dacian reached 57.7% and it declared its offer unconditional.
“As a result of the change of control of Dacian, the likelihood of a superior proposal emerging is low,” Genesis said on Friday.
Genesis’ offer is due to close on Monday.
“The Kin board considers that accumulating a significant interest in one of the participants in the consolidation of the Leonora mining district, that is currently unfolding, is a sensible strategic move and that the current market price of Dacian shares represents good value,” Kin said in a statement to the ASX.
Kin’s Cardinia gold project, which sits between Genesis’ 2 million ounce Leonora gold project and Dacian’s recently mothballed Mt Morgans operation, registered a 10% increased in its resource last week to 1.4Moz.
Cardinia also adjoins Dacian’s Redcliffe project, acquired through the early 2021 takeover of NTM Gold.
“A bit more intrigue in the Leonora Game of Thrones,” Argonaut analyst Royce Haese said.
“Kin holds oxide ounces in the vicinity of the Mt Morgans mill.”
St Barbara, considered the kingmaker of Leonora consolidation, acquired just under 20% of Kin in mid-2021 and made a takeover offer, but was rebuffed by the company’s major German shareholders.
Kin’s recent raising saw those shareholders, which include Delphi, tighten their grip on the junior, moving from 29% to 32%.
Meanwhile, St Barbara did not participate in the placement and its interest in Kin dropped from 19.8% to 15.1%.
At the Gold Forum Americas last week, St Barbara outlined its vision for what “sensible” consolidation in the district could look like.
“Everyone has a view of what it should look like and what it could look like,” St Barbara CEO Craig Jetson said.
“There are plenty of rumours in the market of what I’m up to there.”
St Barbara believes consolidation in the region could create a 500,000-800,000 ounce per annum gold producer within two years with at least 10 years of mine life.
The top end of that production range would make an enlarged Leonora producer the third-largest gold producer on the ASX behind Newcrest Mining and Northern Star Resources.
St Barbara’s projected FY23 Leonora production is 170,000-185,000oz of gold.
Jetson said a consolidated producer would have reduced overheads, shared benefits of scale and high leverage to any improvement in the gold price.
“Consolidation is the holy grail for this region,” he said.
“There’s lots of efficiencies to be had.”
St Barbara and Genesis remain in talks but St Barbara is also in talks with other parties.
The other main player in the region is Red 5 with its 6Moz King of the Hills mine which is working towards commercial production.
“I personally think Red 5 is in a great position – if there is consolidation in the region, we’re extremely well-placed,” Red 5 boss Mark Williams told the Gold Forum Americas last week.
Dacian shares rose 9.5% to 8.1c, giving it a market capitalisation of $101 million.
Shares in Kin rose 4.5% to 7c, valuing the company at $76.5 million.
Genesis has a market capitalisation of $306 million, Red 5 is capped at $472 million and St Barbara is currently worth $559.3 million.
