The will-they-won’t-they couple of Western Australia’s gold sector is about to put a ring on it.
Street Talk can reveal Ramelius Resources chief executive Mark Zeptner and Spartan Resources boss Simon Lawson were in advanced talks over the weekend, flanked by their respective advisers, and seeking to agree terms around a merger.
A deal is slated to be announced to the ASX as early as this week, sources said.
Spartan Resources managing director Simon Lawson at the Dalgaranga Gold Project in WA’s Murchison Region. AFR
Ramelius is capitalised at $2.54 billion and its shares last traded at $2.20 a share. It last year acquired a 19 per cent stake in Spartan, which has a $2 billion market value and whose stock closed on Friday at $1.60. Neither company was available for comment on Sunday.
Sources said Ramelius shareholders had driven increased engagement between the two companies after Ramelius handed down a trading update on its Mount Magnet gold mine on Tuesday, which reflected lower production than anticipated alongside higher-than-expected costs and capital expenditure.
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Investor sources, speaking on condition of anonymity, said the transaction would likely be done via a scheme of arrangement given the size of the two gold producers. It’s also expected to be structured as a low-premium merger because of the outperformance of Spartan’s share price compared to Ramelius, and would offer “genuine synergies”, one shareholder said.
Of note, the potential deal comes after gold prices punched through $US3000 ($4742) an ounce for the first time ever last week, driven higher by a central bank buying spree, and President Donald Trump’s efforts to impose tariffs on allies and strategic rivals. Bullion climbed as much as 0.5 per cent to $US3004.94 an ounce on Friday before erasing gains. No gatecrashers, please
Ramelius boss Zeptner had made no secret of the fact he was on the M&A hunt as the company stared down a production slump in FY25, thanks to its ageing Edna May mine. It tried to acquire Toronto-listed WA gold miner Karora Resources a year ago but lost out to ASX-listed Westgold Resources. It also attempted a $3 billion merger with Westgold, but was turned away.
Could Westgold, once again, try to gatecrash Ramelius’ party? Sources reckon this time around that Westgold is disadvantaged; it is struggling to digest the Karora acquisition and consequently missed out on the recent rally in gold stocks. Ramelius also holds a 19 per cent pre-bid stake.
Sources suggested Spartan could fix Ramelius’ near-term production gap by adding ore to Mount Magnet, with a better return on capital spent as well as the optionality of two processing mills in the area. The sources added that the combined entity, especially its bigger gold production and lower costs, could make it more attractive to passive gold ETFs.
Sternship has been Spartan’s long-time advisers, since it helped the company negotiate with creditors and swerve an insolvency two years ago. Ramelius has historically used Azure Capital, but sources at the Euroz Hartleys conference at Rottnest Island last week said the gold miner has been leaning on Euroz for this deal.
Spartan’s Lawson is expected to join the combined entity’s board.
RMS Price at posting:
$2.20 Sentiment: None Disclosure: Not Held
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