Canada’s Karora Resources (TSX: KRR; US-OTC: KRRGF), the target of a A$1.2-billion (US$830 million) acquisition by Australia’s Westgold Resources (ASX: WGX), said on Monday a leading independent proxy advisory firm is recommending shareholders vote in favour or the deal.
Karora shareholders are scheduled to vote on the cash-and-shares offer at a July 19 meeting.
The note from Institutional Shareholders Services (ISS) emphasizes that the combined entity is expected to achieve significant cost synergies, benefit from increased scale and financial strength, and gain greater diversification.
Karora shareholders will have the opportunity to participate in the potential upside of the merged company through shareholding in Westgold, receive immediate value through the cash component, and retain additional flexibility through ownership of, the advisors said.
If approved, the deal will propel the combined group to become a mid-tier gold miner producing around 400,000 oz. of gold a year in Western Australia. It will have combined ore reserves of 3.2 million ounces of gold and resources of 13 million oz. metal and a market capitalization of about A$2.2 billion (US$1.5 billion).
Karora Resources is focused on increasing gold production at its Beta Hunt mine and Higginsville operations in Western Australia. Earlier this year, it ended merger talks with another Australian gold miner, Ramelius Resources (ASX: RMS).
Last year, Karora produced a record 160,492 oz. of gold, exceeding 2022 output by over 26,000 oz. and beating the high end of its full-year guidance range of 145,000–160,000 ounces.
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