Mako Gold Ltd (ASX:MKG) unanimously recommends a proposed merger with Aurum Resources Ltd (ASX:AUE) to create a well-funded, standout emerging exploration and development gold business in West Africa.
The merger would see the combined group pursue its growth strategy to advance the Napié and Boundiali projects in northern Côte d'Ivoire from a position of greater market scale, underpinned by a strong cash balance of $20 million and a lower consolidated cost base.
Mako managing director Peter Ledwidge said: “We have always believed our Napié Project has potential to host multi-million ounces of gold.
“Pleasingly, due to relative sizes of Mako and Aurum, upon close of the proposed merger, Mako security holders will remain a meaningful part of the expanded group, and therefore will share in the continued upside to the growth in Napié, as well as gain exposure to the rapidly evolving Boundiali Project where Aurum expects to deliver its maiden resource in late 2024.”
Shares jump
Mako shares have been as much as 77.78% higher this morning on the ASX to A$0.016.
Combined tenements of Aurum and Mako.
Merger unanimously recommended
The proposed merger will allow Aurum and Mako security holders to benefit from the combination of Aurum’s strong balance sheet and exceptional drilling efficiencies.
The companies have executed a bid implementation agreement to effect the merger by way of off-market takeover bids under which Aurum will bid for 100% of the shares and 100% of the Class A Options and Class B Options in Mako.
The offer price of 1.8 cents per Mako share represents a 112% premium for Mako shareholders, based on the 30-day VWAP of 0.855 cents per share.
Upon successful completion of the merger, Mako shareholders will own 20.5% of the merged entity while Aurum shareholders will own the remaining 79.5%.
Upon completion of the proposed merger, the enlarged group will have around 192 million shares on issue with an estimated pro-forma market capitalisation of A$90 million.
In the absence of a superior proposal, Mako directors unanimously recommend that all shareholders and option holders accept Aurum’s offers.
“We recommend all security holders embrace this merger as a catalyst to unlock value from Napie,” Ledwidge said.
Well-funded, low-cost explorer
The proposed merger will result in a well-funded, low-cost West African gold explorer with two key gold projects.
This includes the 868,000 ounces at 1.20 g/t gold mineral resource estimate (MRE) across the Napié project and a maiden MRE for the Boundiali Gold Project that is targeted for late 2024.
The combined group will be pursuing its growth strategy from a position of greater market scale, underpinned by a strong cash balance of $20 million and lower consolidated cost base.
The merged company will be driven by a highly experienced board and management team with extensive gold experience from grassroots discovery, through to resource drill-out, feasibility studies, project finance and production.
“Potential to evolve into multi-million-ounce project”
Aurum managing director Dr Caigen Wang said: “The Aurum team is excited to apply our skills to the Napié Project, which we consider has great potential to quickly evolve into a multi-million-ounce project with a dedicated owner-operated multi-rig drilling program which can be delivered at a cost significantly below standard contract rates.”
“We see strong similarities between Napié and the Abujar project where the Aurum executive team, when running Tietto Minerals, were able to rapidly grow resources to 3.8 million ounces and propel Abujar into production before being acquired in mid-2024 for over A$768 million.
“We look forward to collaborating with the strong Mako technical team to marry their exploration skills with our exploration and cost efficiencies to drive benefits for all of our shareholders.
Mako’s Ledwidge added: “We are pleased to agree this deal with the highly capable team at Aurum. The Aurum executive team have a demonstrable track record of being able to rapidly and very cost-effectively drill-out resources using their owner-operator model.”
Napié Gold Project
Mako’s Napié project hosts a maiden mineral resource of 868,000 ounces at a grade of 1.20 g/t gold and is along the same belt as the 3.4-million-ounce Abujar Mine, discovered by Tietto.
The project area covers 224 square kilometres and consists of the Tchaga and Gogbala deposits on the Napié shear. Only around 4.4 kilometres of a total of 30 kilometres systematically drilled to date is included in the mineral resource estimate.
Napié is a shallow, open pittable, high-grade resource with a maximum resource depth between 160 metres and 195 metres across the two deposits and has access to hydroelectricity, bitumen road and water. Deeper and extensional drilling has the potential to rapidly add to existing ounces.
Preliminary recovery test work at the Tchaga deposit returned average recoveries of move than 94%, with strong recoveries attributable to the gold associated with the pyrite (not locked within the pyrite).
Once Aurum has achieved at least 50.1% interest in Mako, it intends to commence diamond drilling at Napié utilising its owner-operated diamond rigs.
Mako recently completed rock chip sampling at the Komboro prospect at the Napié project, which returned very high-grade results including 170 g/t, 41.92 g/t and 6.27 g/t gold, showing potential for resource growth in the underexplored, northern part of Mako’s permits.
Boundiali Gold Project
The Boundiali Gold Project is on the same greenstone belt as Resolute’s 11.5-million-ounce Syama gold mine and Perseus’ 1.4-million-ounce Sissingue gold mine to the north with excellent access to roads, services and power infrastructure.
Aurum has six company-owned drill rigs operating at its Boundiali Project and has ordered two new diamond drill rigs to deploy following completion of the proposed merger.
Aurum’s Wang said, “Between driving growth at Napié and being well on the path to delivery of a maiden resource at our own Boundiali Project later this year, we see strong potential for Aurum to become a strong emerging gold developer in Côte d’Ivoire with two assets with long-life potential in close proximity to each other.”