The merger between Westgold and Karora, set to create a midtier gold miner producing 400 000 oz/y, gained the backing of a major proxy advisory company.

Institutional Shareholder Services (ISS) has recommended Karora shareholders vote for the merger at the company’s upcoming annual and special meeting on July 19.

ISS, which provides independent voting recommendations to institutional shareholders, says the arrangement carries “strategic logic”, citing meaningful cost synergies, and benefits from scale and diversity.

“Karora shareholders will be able to participate in the upside represented by the combined company through the share consideration, receive some degree of certain and immediate value through the cash portion and retain additional optionality through the ownership of Spinco,” says ISS.

The transaction, announced in April, requires 66.67% of the votes cast by Karora shareholders at the meeting.

Karora shareholders will receive 2.524 Westgold shares, complemented by A$0.68 a share in cash and 0.30 a share in a new company to be spun off from Karora. The new entity will incorporate Karora’s shareholding in lithium explorer Kali Metals and a 1% lithium royalty on specified mining interests.

“Once complete, the transaction brings complementary teams and assets together to establish Westgold 3.0, a compelling investment proposition in the Australian gold sector. Westgold 3.0 will be a large, unhedged, well-funded owner operator that is fully leveraged to the gold price,” said Westgold MD and CEO Wayne Bramwell.

The cornerstone of the merger is the consolidation of prized assets, notably Beta Hunt. Westgold believes the consolidation of Beta Hunt with other assets, such as the Big Bell expansion at the Murchison operations, the emerging Bluebird and iconic Great Fingall mine, under one Australian management, laid the groundwork for a new powerhouse in the gold mining landscape.

“With unapparelled organic growth and exploration upside across two strategic West Australian goldfields and a team that has demonstrated the ability to deliver consistent shareholder returns, the value proposition of the expanded business will have enhanced international appeal," states Bramwell.

The boards of both companies have recommended the transaction to their shareholders.  

The final court hearing for the transaction is scheduled for July 24 and the transaction is set to be completed on July 31.