Alkane Resources Limited (ASX: ALK) (“Alkane”) and Mandalay Resources Corporation (“Mandalay”) (TSX: MND, OTCQB: MNDJF) are pleased to announce that they have agreed to combine in a “merger of equals” transaction and have executed a definitive arrangement agreement (the “Arrangement Agreement”) whereby Alkane will acquire all the issued and outstanding common shares of Mandalay pursuant to a court-approved plan of arrangement (the “Transaction”). Following completion of the Transaction, the combined company will continue operating as “Alkane Resources”, remain listed on the ASX and is seeking a listing on the TSX exchange.
Under the Transaction, Mandalay shareholders will receive 7.875 ordinary shares of Alkane for each ordinary share of Mandalay (the “Exchange Ratio”) held immediately prior to the effective time of the Transaction (the “Effective Time”). Upon completion of the Transaction, former Mandalay shareholders and existing Alkane shareholders will own approximately 55% and 45%, respectively, of the outstanding ordinary shares of the combined company, on an undiluted basis4. The implied market capitalization of the combined company is estimated at A$1,013 / C$898 million3. The executive team of the combined company will be Australian-based and led by Alkane Managing Director Nic Earner, an established executive with deep operational, management and corporate experience.
The Transaction will create a diversified Australian centric gold and antimony producer with a portfolio of three operating mines and a strong balance sheet. Alkane’s established Tomingley gold mine (Australia), currently ramping up after a major capital expansion, will complement the well-established and stable production from Mandalay’s Costerfield underground gold/antimony mine (Australia) and the Björkdal underground gold mine (Sweden).
Strategic Rationale for the Transaction
Combined forecast production of ~160,0001 gold-equivalent ounces in 2025, growing to over ~180,0002 gold-equivalent ounces in 2026. The combined company will operate three producing mines in premier jurisdictions – Costerfield and Tomingley in Australia and Björkdal in Sweden. The combined company’s margins are expected to expand with 2025 AISC of ~A$2,750 / ~US$1,7603 per ounce reducing to approximately ~A$2,160 / ~US$1,420 per ounce in 2026.5
Improved capital market positioning anticipated to drive valuation re-rate. The combined company is expected to benefit from a primary ASX listing valuation re-rate driven by GDXJ and potential ASX 300 index inclusion. Further value should be unlocked through greater trading liquidity, a larger free-float and a more diverse shareholder base as the combined company continues to grow.
Creates a powerful platform with a shared vision for continued growth. Robust balance sheet with a proforma cash balance of A$188 / C$167 million3 at 31 March 2025 to pursue organic and inorganic growth. The combined company plans to continue to invest in exploration at all three of its producing mines and pursue other growth opportunities in addition to the Boda-Kaiser copper-gold project which adds future production potential with its significant scale.
Merged leadership focused on delivering re-rate and driving growth. The combined company’s Board of Directors will consist of three Mandalay nominees (Brad Mills, Frazer Bourchier and Dominic Duffy), two Alkane nominees (Ian Gandel and Nic Earner) and a new independent Chair, Andy Quinn, a chartered mining engineer and highly credentialed investment banking and mining industry veteran. Management, led by Nic Earner, and including Mandalay’s operating team, provides operational continuity and foundation to unlock portfolio value.
Nic Earner, Managing Director of Alkane, commented: “The Transaction will take Alkane to a new level, bringing together two companies with complementary assets and a shared vision for growth. Mandalay’s two high-quality mines match the attributes of Tomingley: a proven history of consistent production, cash generation and exploration upside. The combination of assets, leadership, and supportive long-term shareholders enhances our scale and financial strength, and positions us well to continue to pursue additional growth opportunities”.
Frazer Bourchier, President and CEO of Mandalay, commented: “The Transaction presents a compelling opportunity for Mandalay shareholders to accelerate value creation through increased capital markets scale, liquidity and a growing diversified asset base. We are excited to have found a like-minded partner committed to the same principles. The Transaction aligns with our vision to create a mid-tier gold and antimony producer with mines in premier operating jurisdictions and with our strategy for continued growth. I am also pleased to have gained support of our major shareholders, as we believe the combined company will be extremely well positioned for a valuation re-rate in line with ASX-listed peers, and for subsequent growth”.
Benefits for Shareholders
Diversified production from three mines in premier jurisdictions reduces overall operational and financial risk.
Larger equity free-float and greater trading liquidity driven by anticipated increase in institutional and passive index investment.
Valuation expected to re-rate to higher ASX-listed gold mining company multiples.
Mandalay shareholders expected to benefit from Tomingley gold mine production and the growth potential of the large Boda-Kaiser copper-gold project.
Alkane shareholders expected to benefit from exposure to strategic antimony production from Costerfield and combined company’s strengthened balance sheet.
Market Metrics
Based on the Exchange Ratio of 7.875 and the closing price of each company’s shares on the most recent trading day, the Transaction implies a premium of 2% to Mandalay’s share price6. On a 20-trading day VWAP7 the Transaction implies a discount of 6% to Mandalay’s share price. The implied market capitalization of the combined company is A$1,013 / C$898 million3.
Management Team
Upon closing of the Transaction, the management team of the combined company will be led by current Alkane executives Nic Earner (Managing Director) and James Carter (Chief Financial Officer). Current Mandalay executives Ryan Austerberry (Chief Operating Officer) and Chris Davis (VP Exploration and Operational Geology) will join existing Alkane senior operational management to provide critical continuity for the Costerfield and Björkdal mines. The combined company will be headquartered in Perth, Australia.
Transaction Details
Pursuant to the terms and conditions of the Arrangement Agreement, Mandalay shareholders will receive 7.875 Alkane ordinary shares for each Mandalay common share held immediately prior to the Effective Time.
The Transaction will be effected pursuant to a court approved plan of arrangement under the Business Corporations Act (British Columbia). The Transaction will require approval by 66 2/3 percent of the votes cast by the shareholders of Mandalay at a special meeting of Mandalay shareholders. The issuance of the Alkane ordinary shares pursuant to the Transaction is also subject to approval by a simple majority of votes cast by the shareholders of Alkane at a special meeting of Alkane shareholders.
Directors, officers and shareholders of Mandalay (including CE Mining and GMT Capital) who hold approximately 45% of the outstanding Mandalay common shares have entered into voting support agreements pursuant to which they have agreed, among other things, to vote their Mandalay common shares in favour of the Transaction. Certain Directors of Alkane who hold approximately 19% of the outstanding Alkane ordinary shares have stated their intention to vote their Alkane common shares in favour of the share issuance pursuant to the Transaction.
In addition to shareholder and court approvals, the Transaction is subject to applicable regulatory approvals, including under the Australian and Swedish foreign investment approval regimes, ASX approval of the listing of the Alkane common shares to be issued under the Transaction and confirmation by ASX that Alkane does not need to re-comply with Chapters 1 and 2 of the ASX Listing Rules for the purposes of ASX Listing Rule 11.1.3, as well as certain other closing conditions customary for a transaction of this nature. Subject to the satisfaction of such conditions, the Transaction is expected to close in calendar Q3 2025.
The Arrangement Agreement includes customary deal protections, including reciprocal fiduciary-out provisions, non-solicitation covenants, and the right to match any superior proposals. Additionally, a termination fee in the amount of A$17 million is payable by Alkane and Mandalay, respectively, in certain customary circumstances. In connection with the Transaction, Alkane will apply to have the shares of the combined company listed on the TSX.
