Forrestania swoops on Zenith in $93M WA gold growth play

Zenith Minerals has agreed to an off-market scrip takeover by Forrestania Resources in a savvy corporate action that values the company at $93.5 million.

The binding transaction will consolidate two Western Australia-focused exploration and development portfolios, centred on Zenith’s 675,000-ounce Dulcie gold project, 70 kilometres south of Southern Cross in the resource-rich Forrestania greenstone belt, bringing together highly complementary portfolios.

Under the signed Takeover Implementation Deed, Zenith shareholders will receive one new Forrestania share for every 4.3 Zenith shares held.

The equity-based deal implies a buyout value of A$0.132 per Zenith share.

Notably, the transaction hands shareholders an impressive 46.7 per cent premium to Zenith’s last closing market price, while clocking an eye-catching 78.6 per cent premium against the 30-day volume-weighted average price.

Rather than being cashed out, Zenith shareholders who accept the all-scrip offer will retain exposure to the company’s exploration and development upside, while gaining the added benefit of participating in a larger, consolidated gold portfolio spanning both companies’ highly prospective landholdings.

The company’s board has unanimously recommended that shareholders accept the offer in the absence of a superior proposal. Putting their money where their mouth is, Zenith’s directors intend to accept the offer for all shares they control, representing about 4.5 per cent of the company’s issued stock.

The takeover bid relies on a customary 50.1 per cent minimum acceptance condition. In a nice kicker, eligible Zenith shareholders can access capital gains tax scrip-for-scrip rollover relief to defer their tax obligations, provided Forrestania secures an 80 per cent or greater ownership stake.

Zenith Minerals managing director Andrew Smith said:“The proposed combination ith Forrestania represents a significant milestone for Zenith and follows a period of transformational growth across our portfolio, particularly at the Consolidated Dulcie Gold Project.’”

The scrip offer will also extend to any new Zenith shares created from the exercise or conversion of outstanding options and performance rights during the offer window.

To protect the integrity of the tie-up, standard deal protection mechanisms have been locked in. Each side has also agreed to transaction guardrails that will activate in certain circumstances, including a $750,000 break fee payable by Zenith and a $625,000 reverse break fee if Forrestania drops the ball.

Intriguingly, both companies have elected to streaml