Mandalay to be acquired by Alkane in A$1B merger; shareholders to receive 7.875 Alkane shares per Mandalay share

Background to the Arrangement

Mandalay Resources Corporation and Alkane Resources Limited have agreed to a significant merger of equals transaction, whereby Alkane, through its wholly owned subsidiary 1536968 B.C. Ltd., will acquire all issued and outstanding shares of Mandalay. The deal, announced in April 2025, proposes that Mandalay shareholders receive 7.875 fully paid ordinary shares of Alkane for each Mandalay share held. This transaction is structured as a statutory plan of arrangement under the Business Corporations Act of British Columbia.

The arrangement requires approval by at least two-thirds of Mandalay shareholders, a majority of Alkane shareholders, and the Supreme Court of British Columbia. Additionally, regulatory approvals are needed in Australia and Sweden. The transaction is anticipated to close in the third quarter of 2025, subject to these conditions.

Strategic Rationale and Combined Operations

The combined entity will operate three producing mines in premier jurisdictions – the Costerfield gold-antimony mine and Björkdal gold mine, both currently owned by Mandalay, and Alkane’s Tomingley Gold Project in New South Wales, Australia. Alkane also brings the Boda-Kaiser Project, a large gold-copper porphyry system with significant growth potential. The combined company is expected to have a pro forma market capitalization of approximately A$1.023 billion and a robust balance sheet with a pro forma cash balance of around A$188 million as of March 31, 2025.

Production guidance for the combined company anticipates approximately 160,000 gold-equivalent ounces in 2025, growing to over 180,000 ounces in 2026, supported by exploration and development activities across all assets. The merger is expected to deliver increased scale, diversification, and enhanced capital markets profile, including dual listing on the Australian Stock Exchange and the Toronto Stock Exchange.

Governance and Management

The Mandalay board has unanimously recommended the arrangement, supported by fairness opinions from Haywood Securities Inc. and GenCap Mining Advisory Ltd. Post-merger, the Alkane board is expected to include three Mandalay nominees, two Alkane nominees, and a new independent chair, Andrew Quinn, a seasoned mining industry veteran. Alkane’s current executives, including Managing Director Nic Earner and CFO James Carter, will lead the combined management team, with key Mandalay executives joining to ensure operational continuity.

Shareholder Considerations and Transaction Mechanics

Shareholders of Mandalay will exchange their shares for Alkane shares on a fixed ratio basis, with fractional shares rounded down. Mandalay’s outstanding options and equity incentive awards will fully vest and be exercised or settled immediately prior to completion. Registered Mandalay shareholders have dissent rights, allowing them to seek fair value for their shares if they do not support the arrangement, subject to strict procedural requirements.

The arrangement agreement includes customary deal protections, including a termination fee of A$17 million payable under certain circumstances. The transaction is subject to customary closing conditions, including court approval, shareholder approvals, and receipt of key regulatory consents such as the Foreign Investment Review Board approval in Australia and the Swedish FDI approval, which has already been obtained.

Financial Impact and Outlook

The pro forma financial information indicates a combined entity with a strong balance sheet and diversified asset base. The merger is expected to unlock value through operational synergies, enhanced liquidity, and access to broader capital markets. Both companies have reported solid production and cost guidance, with Alkane’s Tomingley operation targeting 70,000 to 80,000 ounces of gold in 2025 at all-in sustaining costs of A$2,400 to A$2,600 per ounce.

Investors should note that the TSX listing of Alkane shares is subject to approval and is not guaranteed. Market conditions, commodity price fluctuations, and integration risks remain factors to monitor as the transaction progresses.