In a case of third time lucky, Gold Road Resources’ disciplined approach to growth through acquisition is about to come up with the bag of lollies.
By the end of the week, Gold Road’s (ASX: GOR) stake in $230 million takeover target DGO Gold was north of 83 per cent and close to the finish line – in this case, the June 30 deadline for acceptance of the unconditional scrip offer by the target’s shareholders.
Notwithstanding the equity market turbulence – as substantial as the swell predicted off the coast of Perth today and tomorrow that forced ferry operators to cancel services to and from Rottnest – Gold Road’s takeover of DGO was just one of three deals to reach milestones this week.
Late on Thursday Vimy Resources (ASX: VMY) released the scheme booklet for its $450 million scrip merger with suitor Deep Yellow (ASX: DYL) to create the ASX’s premier pure-play uranium stock.
Importantly, independent expert Deloitte Corporate Finance declared the deal as “fair and reasonable and in the best interests of Vimy shareholders”. Vimy shareholders will vote on the deal on July 20.
And on Wednesday Northern Star Resources (ASX: NST) completed the $44.5 million disposal of the non-core Paulsens and Western Tanami gold assets. Paulsens was the foundation asset for Northern Star but, in a clear signal by management that nostalgia will not run strategy, the asset (and Western Tanami) was valued more highly by Black Cat Syndicate (ASX: BC8).
Back to Gold Road. It took some nudging of DGO’s tightly held share register and a small increase in the offer ratio – from the original 2.16 Gold Road shares for every DGO unit to 2.25-for-one – but Gold Road is closing in on a prize that gives it a seat at the table of Australia’s largest greenfields gold discovery since … Gruyere, discovered by Gold Road in 2013.
DGO is, for all intents and purposes, a listed investment vehicle with sizeable stakes in a mix of ASX-listed companies.
Gold Road managing director Duncan Gibbs had made clear from the outset that DGO’s 14.4 per cent stake in De Grey Mining (ASX: DEG) was the core attraction.
De Grey is progressing resource and study work on the Mallina gold project in the Pilbara, which includes the monster Hemi deposit. Hemi is the best new gold discovery in Australia since Gold Road found Gruyere in the north-eastern Goldfields.
World-class discoveries – Gruyere was the first in Australia in years since IGO and AngloGold Ashanti identified Tropicana in 2005 – are not easy to find and the rewards highly sought-after.
Gruyere has become a Tier 1 gold mine, developed in a 50-50 joint venture with South Africa’s Gold Fields and heading towards an annual run rate of 350,000 ounces. It has transformed half-owner Gold Road into a dividend-paying, billion-dollar ASX stock.
With the DGO bid all but done and dusted, Gold Road has ensured its seat at the table when discussions turn to how to deliver value from Mallina.
It is a great position to be in with little downside for Gold Road, which has been patient in its push over the past 18 months to use the Gruyere foundation to add another asset to its portfolio.
The Perth company refused to overpay for a 30 per cent stake in Tropicana (buyer: Regis Resources) and for aspiring producer Apollo Consolidated (buyer: Ramelius Resources).
On Wednesday, when Gold Road declared its offer for DGO unconditional, it also took control of the target’s board with the appointments of Mr Gibbs and his executives John Mullumby and Hayden Bartrop as directors.
It marks the start of the gradual integration of DGO into Gold Road.