Alto Metals Ltd (ASX:AME) has entered into a Scheme Implementation Deed (SID) with Brightstar Resources Ltd (ASX:BTR) which will see the latter acquire 100% of Alto to consolidate the Sandstone gold district in Western Australia.
Under the scheme, Alto shareholders will receive four Brightstar shares for each Alto share held on the record date with this consideration having an implied value of approximately 6 cents per Alto share.
This represents a significant premium of ~82% to the closing Alto share price of 3.3 cents per share on July 30, 2024, and ~81% to Alto’s 30-day VWAP of 3.3 cents per share up to and including July 30 and implies a fully diluted equity value for Alto of $44.4 million.
Board recommends scheme
Alto's board has unanimously recommended the scheme and Alto directors intend to vote all Alto shares in which they have a relevant interest in favour of the scheme, in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the scheme is in the best interests of Alto shareholders.
With the same terms, the company’s largest shareholder, Windsong Valley Pty Ltd, representing ~15% of the Alto shares on issue, has confirmed that it intends to vote such of those shares that it holds at the time of the scheme vote in favour of the scheme.
Brightstar has also entered into a tenement sale agreement with Gateway Mining Ltd (ASX:GML) under which it has agreed to acquire 100% of the Montague East Gold Project for consideration of $14 million with Gateway to retain all non-precious metal rights.
This would give the combined entity approximately 3 million ounces of JORC 2012-compliant gold mineral resources and Alto would hold approximately 29% of the group with Brightstar holding 66% and Gateway 5%.
“Exciting opportunity”
Alto’s managing director Matthew Bowles said: “The scheme announced today is a key step towards building a significant gold business and provides Alto shareholders with an exciting opportunity to become part of an emerging gold producer.
“In addition to delivering a significant premium, the scheme, if approved and implemented, will allow Alto shareholders to retain ongoing exposure to the development of the Sandstone Gold Project, as part of a larger resources group holding multiple projects, which will reduce the risks associated with holding a single project.
“We believe this transaction is a great outcome for Alto shareholders and stakeholders, who will benefit from the development of the Sandstone Gold Project as part of an enlarged gold company with an exciting future.”
Consolidating ground
On implementation of the scheme and completion of the Montague acquisition, Brightstar will become a significant junior West Australian gold explorer, developer and producer with a material exploration and development platform.
This will consolidate highly prospective exploration ground in the Sandstone region which will complement Brightstar’s existing production, development and exploration asset portfolio, for the benefit of Brightstar, Alto and Gateway shareholders.
“A compelling transaction”
Brightstar’s managing director Alex Rovira said: “This is a compelling transaction for all stakeholders, as the sensible consolidation of the Sandstone and Montague East gold projects delivers an asset base with the critical mass to be advanced towards meaningful production.
"The Sandstone Hub has the mineral endowment and exploration upside to be a significant development opportunity in Western Australia in the coming years and presents as an asset with potential to support Brightstar’s aggressive growth ambitions to become a multi-asset mid-tier WA gold producer.
"Brightstar has the team and experience to fast-track the exploration and development of the Sandstone assets in parallel with the development of the Menzies and Laverton gold projects, to underpin Brightstar’s ambitions of becoming a multi-asset producer in WA.
"With the DFS for the Menzies and Laverton Gold Projects due in 1H 2025, Brightstar remains well placed to make FID on the restart of several mining opportunities within our current portfolio which, when in production, we expect will assist to organically fund further investment in the Sandstone and Montague East gold projects in the near future.”