Merger Of Two Junior Gold Producers Calls For A Negative Response

  • Nov 14, 2018 AEDT
  • Team Kalkine
Merger Of Two Junior Gold Producers Calls For A Negative Response

Silver Lake Resources Limited (ASX: SLR) and Doray Minerals Limited (ASX: DRM) entered into a binding Scheme implementation agreement on November 14, 2018 i.e. today. Under this  Doray Scheme of Arrangement, the two companies will merge. This merger agreement will bring two complementary West Australian high-grade gold producers under one entity which will form a leading ASX mid-tier gold producer. 

Under this agreement, each shareholder of Doray, will receive 0.6772 shares of Silver Lake for every Doray Share. Silver Lake will have a holding of 62.7% and Doray will have a holding of 37.3% in the merged entity.

Each Doray Director intends to have all the shares that they hold in Doray for voting in favor of the Scheme, in both instances, i.e., in the absence of a superior proposal and subject to an Independent Expert opining that the Scheme is in the best interests of Doray Shareholders. Approximately 810 million outstanding ordinary shares will be recorded upon the completion of the scheme and the formation of the merged entity.

Sternship Advisers and RBC Capital Markets are the Silver Lake’s financial advisers and PCF Capital Group is Doray’s financial adviser.

An indicative time line for the scheme implementation along with effective and record dates have been provided. The effective date mentioned under the time table issue is March 13, 2019, and the record date is March 15, 2019. The scheme is expected to be implemented by March 20, 2019.

After the completion of the scheme, the merged entity’s board will be consisting of six members, of which four members will be from the current Silver Lake Board and other two will be from current Doray Board.

Implementation of the scheme is subjective to certain conditions: Majority Doray Shareholders’ approval (representing 75% of the total votes cast), Independent Expert opinion for the scheme to be in the best interest of Doray shareholders, and approval from the Court.

The merged entity will provide for a focused operating model with aggregated functional support that will enhance the opportunities for supply chain and optimization of site operating configuration and will contribute to a diverse cash flow base.

Mineral resource base of approximately 4.6m gold equivalent ounces will be owned by the merged entity. On September 30, 2018, the merged entity posted pro-forma net cash and cash equivalents at approximately A$119m. Strong balance sheet along with strong cashflow provides the opportunity to fund the organic growth opportunities more effectively and efficiently. Healthy operating and financial metrics will allow the merged entity to approach towards future opportunities and tap other growth opportunities.

The formation of the merger will help the merged entity to place itself into the mid-tier gold producer peer group and hence enhancing its market presence and liquidity. The combination of two miners will create a mid-tier producer of 240,000-ounces per year.

Announcement of the scheme did not attract investors and this could be seen through the price levels of both the scrips. Doray Minerals slipped by 11.11% to trade at $0.320 and SLR slipped by about 9.6% to trade at $0.470.


The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.



All pictures are copyright to their respective owner(s) does not claim ownership of any of the pictures displayed on this website unless stated otherwise. Some of the images used on this website are taken from the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image.


There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.

Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.

As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK