Merger Overview and Strategic Rationale
Aurum Resources Limited (ASX: AUE) has entered into a Bid Implementation Agreement (BIA) with Mako Gold Limited (ASX: MKG), with the intention of merging both companies into a formidable gold exploration and development entity focused on West Africa. Under the proposed off-market takeover, Aurum will acquire 100% of Mako’s issued shares and unlisted options.
This merger will establish an emerging exploration and development business with over A$20 million in cash to advance flagship projects in northern Côte d'Ivoire, specifically the Napié and Boundiali Projects. With the merger, the combined entity will benefit from Aurum's efficiency in resource development and Mako’s significant assets, providing a strong platform for future growth.
Financial and Strategic Benefits of the Merger
The proposed takeover includes a share exchange, offering Mako shareholders one Aurum share for every 25.1 Mako shares. The offer represents a 112% premium based on the 30-day volume-weighted average price (VWAP) of Mako shares. Mako shareholders will own 20.5% of the combined entity, while Aurum shareholders will hold the remaining 79.5%.
Aurum will also assume all outstanding options, providing significant value to Mako option holders. The merger offers several advantages, including greater market scale, a lower cost base, and substantial cash reserves of over A$20 million, which will fund aggressive exploration activities.
Strengthening the Gold Exploration Footprint in Côte d'Ivoire
With this merger, the combined company will focus on expanding and developing gold projects across Côte d'Ivoire, with Napié and Boundiali being key targets. The Napié project, which currently boasts a maiden mineral resource of 868,000 ounces at 1.20g/t gold, offers significant resource growth potential. Aurum plans to deploy its company-owned drill rigs to further accelerate drilling activities, maximizing operational efficiencies.
Boundiali, situated in the same belt as large-scale mines, also presents a major opportunity, with Aurum expecting to deliver a maiden resource estimate by late 2024. The merger positions Aurum to drive substantial resource expansion in both projects, providing a platform for long-term growth.
Leadership and Operational Synergies
Post-merger, Aurum will incorporate Mako’s technical team into its operations, combining the strengths of both companies. Mako’s Managing Director, Peter Ledwidge, expressed confidence in Aurum’s ability to rapidly expand the Napié project, emphasizing the operational synergies of Aurum’s owner-operated drilling model.
Aurum's leadership team, led by Managing Director Dr. Caigen Wang, brings deep expertise in gold exploration and development, further strengthening the combined entity's ability to unlock value for shareholders. The addition of Mako’s Board member, Mr. Steven Zaninovich, to Aurum’s Board will further enhance the group’s experience in gold exploration and mine development.
Outlook and Next Steps
Mako’s Board has unanimously recommended that shareholders accept the offer, recognizing the significant premium and the strategic value of the merger. The combined company will focus on accelerating exploration at the Napié and Boundiali Projects, targeting significant resource growth in 2024 and beyond.
Shareholders can expect further details about the merger process in the upcoming Bidder’s and Target’s Statements, with the offer opening on 25 October 2024.
This merger creates an exciting opportunity for both Aurum and Mako shareholders to benefit from an expanded gold exploration footprint in West Africa, a strengthened financial position, and a leadership team with a track record of driving resource growth and project success.
