Genesis Minerals and Vault Minerals have signed a binding deal to merge, creating a $12.6 billion gold miner producing 600,000 to 700,000 ounces a year, enough to rank third in Australia and inside the top 20 globally.
Most of that gold will come from one stretch of Western Australia’s northern Goldfields. The two companies’ mines sit side by side in the Leonora-Laverton district, where together they produced 465,000 ounces last financial year, more than any Australian gold operation other than Newmont’s Boddington.
The signing ends a short contest for Vault. Genesis put a binding proposal on the table earlier this month, Vault’s board decided it beat the company’s existing merger agreement with Regis Resources, and Regis chose not to match it, leaving the two companies free to sign.
Genesis is paying about $5.6 billion for Vault, made up of roughly $500 million in cash and the rest in shares. Vault shareholders will get 0.7629 Genesis shares and 47.5 cents cash for every Vault share they hold, valuing Vault at $5.274 a share, and can choose to take more cash or more shares instead. The Vault board has unanimously backed the deal, which is due to complete in November.
The $12.6 billion merged company will hold 9.4 million ounces in ore reserves, 33.6 million ounces in mineral resources and $611 million in net cash.
Geography does most of the work. Vault’s King of the Hills mill, north of Leonora, sits 35km from Genesis’ undeveloped Tower Hill deposit. Trucking Tower Hill’s 2.0 gram per tonne ore to King of the Hills means Genesis never has to build a new plant, saving about $715 million, and the richer feed pushes out the mill’s 0.3 gram per tonne open pit ore. King of the Hills could then produce more than 300,000 ounces a year, lifting total Leonora output to about 500,000 ounces by the 2029 financial year.
Near Kalgoorlie, Vault’s Randalls mill gives Genesis somewhere to process the free-milling ore on its Bardoc ground, which holds 1.3 million ounces of resources with approvals for the Zoroastrian underground already in place.
The companies expect the deal to save them $2 billion over 10 years, including $1.5 billion that only this pairing of assets can deliver.
Genesis managing director Raleigh Finlayson will run the merged group, with current Vault chair Russell Clark keeping the same role at the bigger company. Between them they will hold the biggest position in a district that contains more than 85 million ounces of gold.