PERTH (miningweekly.com) – The directors of ASX-listed junior Kalgoorlie Mining on Wednesday advised shareholders to accept a takeover offer from fellow-listed gold miner Norton Gold Fields.

Norton said that it would offer 0.054 of its own shares, and 0.054 options for every Kalgoorlie share held, exercisable at 27c an option before the end of April 2015, and 0.024 options for each listed Kalgoorlie option, exercisable at 25c a share, before the end of May next year.

The offer represented a 55% premium to Kalgoorlie’s shares, based on a 90-day volume-weighted average price of Norton’s shares, and an independent valuation of the Norton options.

“This transaction just makes good sense. It brings together complementary assets and will deliver greater production, cost efficiency and exploration upside for both companies and their respective shareholders,” said Norton CEO Dianmin Chen.

He noted that Norton’s vision was to become a leading, long-term gold producer in Western Australia, adding that the proposed acquisition of Kalgoorlie Mining was consistent with the company’s strategy to reduce operating costs and increase production, both from its existing assets and by exploring opportunities for consoliation.

“We have an important strategic asset in the Paddington operations, which complements Kalgoorlie’s Bullant project. Bullant has existing gold resources of 431 200 oz and reserves of 40 300 oz, which can be readily accessed through the resumption of underground mining and processed at Paddington.”

Chen added that the Bullant operation was in close proximity to Norton’s existing underground operations at Mount Pleasant and added that Kalgoorlie’s ground was contiguous with Norton’s, providing future exploration and development potential.

“The transaction will have the added benefit of diversifying Norton’s shareholder base and improving the liquidity of Norton shares,” Chen said.

Meanwhile, Kalgoorlie’s MD James Croser noted that the Norton offer provided company shareholders with an attractive premium, while also giving them the opportunity to participate in the upside that existed in the combined company.

“Norton’s experienced management team has the development and mine operation capabilities to maximise the value of Kalgoorlie’s assets and bring them quickly and cost effectively into production.”

Croser added that the offer would also reduce the risk that Kalgoorlie shareholders faced through an investment in a single mine company, with limited access to capital.

“Each Kalgoorlie director considers the offer to be in the best interest of shareholders, and unanimously recommend the offer, in the absence of a superior proposal,” Croser said.

The takeover offer would be subject to a minimum acceptance of 90%, as well as regulatory approval, including that from the Foreign Investment Review Board.