By Rhiannon Hoyle
Australian gold producers Red 5 and Silver Lake Resources have announced a merger that will create a new mid-tier gold company and establish a strong foundation for future growth.
In a joint statement, the companies revealed that Silver Lake shareholders will receive 3.434 Red 5 shares for every Silver Lake share they currently hold. Following the merger, Red 5 shareholders will possess approximately 52% of the combined group, while Silver Lake shareholders will hold the remaining stake.
Russell Clark from Red 5 will assume the role of Chairman in the newly formed company, while Luke Tonkin, the Managing Director of Silver Lake, will serve as Chief Executive.
Strong Financial Position
"The increased scale, diversification, and financial strength of the new company resulting from this transaction will be the catalyst for continued robust cash flow generation and further expansion," stated Tonkin.
The combined group is expected to have the capacity to produce approximately 445,000 troy ounces of gold per year.
Reshaping Shareholder Structure
Silver Lake currently owns around 12% of Red 5's shares. As per Australian law, following the merger, Silver Lake's ownership stake in Red 5 will either be monetized or cancelled.