This article first appeared on GuruFocus.

Regis Resources Ltd. (RGRSY) has agreed to acquire Vault Minerals Ltd. (REDLF) in an all-share transaction that the companies said values the combined business at about A$10.7 billion, or $7.7 billion. The structure gives Vault shareholders 0.6947 new fully paid ordinary Regis shares for every Vault share they own, setting up a near-even ownership split, with Regis shareholders holding roughly 51% and Vault shareholders holding about 49% of the merged company. The deal could move Regis into a bigger league in Australian gold, with the new entity expected to overtake Evolution Mining Ltd. (EVMNY) and become Australia's third-largest gold producer by market capitalization.

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The timing is hard for investors to ignore. Gold dealmaking has picked up in recent years as bullion prices surged, with the precious metal almost doubling over the past two years and trading near $4,500 an ounce on Tuesday. The combined company will remain headquartered in Perth, Western Australia, and will be led by Regis Chief Executive Officer Jim Beyer. The companies said the enlarged miner will produce more than 700,000 ounces of gold annually, while also expecting around A$500 million in corporate tax savings and additional operational benefits.

For investors, this could be a scale-and-liquidity story as much as a gold-production story. Beyer said the merged company becomes materially more relevant to the global gold investment universe, adding that its larger scale materially improves trading liquidity and could support larger, longer-term institutional participation. The market reaction was mixed, with Regis shares falling as much as 7.1% in Sydney while Vault rose more than 6%, possibly reflecting the usual tension in all-share deals between strategic scale and near-term dilution concerns. Canaccord Genuity Australia senior mining analyst Tim McCormack said further mergers and acquisitions could continue, pointing to valuation gaps among established producers and well-advanced developers trading at large discounts to fair value.

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