Two Tanzania gold explorers announce merger

BY BUSINESS REPORTER AND AGENCIES

TANZANIA’S-focused gold explorers Brightstar Resources and Rift Valley Resources, both listed on the ASX, on Monday announced their intention to merge.

Under the scheme implementation agreement, Rift Valley shareholders would receive 1.25 BrightStar shares for each Rift Valley share held.

The combined group would have a market capitalisation of some A$47-million based on the ASX closing prices of the two companies, and would have cash on hand of around A$12.6-million. This would see the group well financed through the next phase of exploration and resource definition work, as well as allowing the merged company scope to pursue further growth initiatives.

The companies said in a joint statement that the friendly merger would create a leading, independent Tanzanian gold exploration company with an objective of becoming a 200 000 oz/y producer, with a resource of some two-million ounces.

The merged entity would have an interest in around 760 000 oz of gold at two key projects, namely Kitongo and Miyabi, as well as being able to pursue advanced greenfield exploration projects in the project pipeline.

“The combined entity will be able to leverage off the benefit of creating a larger company with the depth of expertise and skills, funding ability, scale of operation and market capitalisation to make a significant impact in the Tanzanian resources landscape,” commented Rift Valley chairperson Didier Murcia.

The merged entity board would consist of management representation from both Rift Valley and BrightStar, with Murcia acting as the nonexecutive chairperson.

Rift Valley MD Michael McKevitt would be appointed as MD for the merged entity, while BrightStar executive directors Geoff Gilmour and Paul Payne would be executive directors of the merged company.

“I believe the proposed merger will benefit shareholders by creating an entity with quality projects, working capital and the right mix of experienced people. I highly recommend this proposed merger to all shareholders,” said BrigthStar chairperson Warren Gilmour.

The merger would be subject to shareholder and regulatory approval, as well as an independent expert concluding that the scheme was in the best interest of all shareholders.

The scheme booklet would now be mailed to shareholders, and a meeting was expected to be called in late March or early April. The scheme was expected to be implemented in either late April, or early May.