Kingwest Resources Ltd (ASX:KWR) and Brightstar Resources Ltd have agreed to merge.
The companies have entered a binding scheme implementation deed (SID), that will see Brightstar acquire 100% of KWR’s shares.
The merger brings together two complementary West Australian gold companies and leverages Brightstar’s processing infrastructure (currently on care and maintenance) to unlock the development potential of the Menzies Gold Project and the combined JORC mineral resource portfolio.
Kingwest shareholders will receive one Brightstar share for every 0.44 shares held at the scheme record date.
Once the scheme is implemented, Kingwest shareholders will hold approximately 43% and Brightstar shareholders will hold approximately 57% of the merged entity.
The Kingwest Board unanimously recommends that Kingwest Shareholders vote in favour of the scheme, with the main benefit being that a strategic consolidation of the gold assets of Brightstar and Kingwest will materially increase scale to the benefit of all shareholders and reduce timeline to potential production.
Speaking about the merger Kingwest chairman Greg Bittar said: “This is a compelling transaction for Kingwest and provides the scale, resource base and processing infrastructure needed to unlock the inherent value of the Menzies Gold Project.
“The transaction is an outstanding opportunity for Kingwest given the ability for Kingwest’s high grade open pit ounces to be processed at Brightstar’s infrastructure located in Laverton. Kingwest shareholders retain a meaningful stake in the merged group, and we strongly believe in the potential of the combined asset portfolio.”
Brightstar managing director Bill Hobba was also buoyed by the developments.
“This is a transformational transaction for Brightstar which marks a refreshed strategic direction for the company. The merger with Kingwest creates a larger, diverse junior gold play and means the company can now start to assess development options utilising a larger resource base and our significant existing infrastructure,” Hobba said.
New MD for Brightstar
The board and management of the merged entity will also be refreshed with Alex Rovira to be appointed as managing director and Hobba retiring from the board.
“In addition to the merger with Kingwest, we are delighted to announce Alex Rovira as our incoming managing director, to guide the company through this important and exciting next stage of growth. We are extremely confident this transaction and leadership appointment will create long-term value for Brightstar and Kingwest shareholders alike,” Hobba said.
Hobba has played an instrumental role in the merger, particularly in unlocking significant potential value for Brightstar shareholders and will continue to be employed by Brightstar in the capacity of technical services manager.
He has been with the company since 2012.
Rovira will take on the MD role in mid-January 2023.
For the past nine years, Rovira has been working as an investment banker at a global financial services company that focused on the metals and mining sector.
In other executive movement, Dean Vallve, who was recently appointed COO of Kingwest, is proposed to be appointed COO of the merged group and will bring with him a strong technical skillset and operating experience.
The merged group’s board will have six members comprising:
- Brightstar Directors – Alex Rovira, Yongji Duan and Joshua Hunt
- Kingwest Directors – Greg Bittar, Ashok Parekh and Jonathon Downes
About the merger
The merger is to be implemented by way of a Kingwest Scheme of Arrangement, under which Brightstar will acquire 100% of the shares in Kingwest.
Upon implementation of the scheme, the merged group will have approximately 1,472.9 million ordinary shares outstanding and continue to trade as Brightstar Resources Ltd under the ticker BTR.
Capital raise
Brightstar has received firm commitments from sophisticated investors to raise $1.6 million.
The company will place approximately 100 million fully paid ordinary shares in Brightstar at an issue price of $0.016 per share, with proceeds going to advancing exploration activities as well as working capital.
As a show of faith, Rovira and Hobba, along with director Joshua Hunt (or their respective associates) are participating in the placement for a combined $$156,000.
The merged group is estimated to have a pro-forma market capitalisation of $23.6 million with cash and equivalents of $4.6 million and zero debt.
Indicative timetable
The timetable below key dates of the merger:
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