Mandalay Resources (TSX: MND) is set to be acquired by ASX-listed Alkane Resources in what is being billed as a “merger of equals” in a transaction that will create an Australia-focused diversified gold and antimony producer.
Under the terms of the transaction Mandalay shareholders are set to receive 7.875 shares of Alkane for each share of Mandalay held. The figure represents a premium of just 2% versus Friday’s close, and a discount of 6% on a 20 day volume weighted average basis.
Post-transaction, Mandalay shareholders will own 45% of the resulting company, with Alkane expected to have a market value of roughly C$898 million. That market cap, as per Alkane, may be large enough for potential inclusion within the ASX 300, which could lead to a value re-rating, as per the company.
The resulting company is expected to have three cash generating mines, with average annual production of 160,000 ounces of gold equivalent this year, with that figure expected to grow to 180,000 ounces in 2026. The company will operate Alkane’s Tomingley gold mine in Australia, alongside Mandalay’s Costerfield gold and antimony mine in Australia and their Bjorkdal gold mine in Sweden.
But those mines are expected to operate at a fairly high cost, with 2025 all in sustaining costs guided to be US$1,760 an ounce, which next year is forecasted to fall to US$1,420 an ounce.
From a balance sheet perspective, post-merger Alkane is expected to have C$167 million in cash on the books, which is to be spent on exploration at all three producing mines and other growth opportunities.
READ: Mandalay Resources Guides To Lower Gold Production In 2025
In terms of management, the resulting company will see its board of directors consist of three nominees from Mandalay, which are to include Brad Mills, Frazer Bourchier and Dominic Duffy, while Alkane will have two nominees, Ian Gandel and Nic Earner, while the board will be led by independent chair Andy Quinn. Earner is expected to lead the company as Managing Director, alongside the operating team from Mandalay.
“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,” commented Earner on the transaction.
The closing of the deal remains subject to shareholder approval, with shareholders representing 45% of Mandalay having entered into voting support agreements. Alkane meanwhile has secured support from 19% of shareholders. Mandalay requires 66.7% of shareholders to vote in favor of the transaction, while Alkane requires a simple majority to approve of the required share issuance.
A termination fee of A$17 million meanwhile is in play, should the transaction fail under certain circumstances.
As part of the transaction, Alkane will apply to list its shares on the Toronto Stock Exchange.
The transaction is currently expected to close in the third quarter of 2025.
Mandalay Resources last traded at $5.13 on the TSX.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
