Why Kula Gold’s Board Urges Shareholders to Embrace Forrestania’s Takeover Bid

Background to the Takeover Bid

On 14 October 2025, Forrestania Resources Limited (ASX – FRS) announced an off-market takeover bid for all ordinary shares in Kula Gold Limited (ASX – KGD). The offer, detailed in Forrestania’s Bidder’s Statement lodged on 24 November, proposes an exchange ratio of 1 Forrestania share for every 5.6 Kula shares held. This bid aims to consolidate gold exploration assets in Western Australia’s prolific Southern Cross region.

In response, Kula Gold has issued its Target’s Statement on 4 December 2025, formally recommending shareholders accept the offer in the absence of a superior proposal. The Kula Board’s unanimous endorsement underscores the perceived strategic and financial benefits of the transaction.

Why Kula’s Board Supports the Offer

The Kula directors highlight several compelling reasons for their recommendation. Firstly, the offer delivers immediate value to shareholders, representing a 41% premium to Kula’s 10-day volume weighted average price prior to the bid announcement. This premium is significant for a junior explorer operating in a challenging capital market environment.

Secondly, the transaction reduces funding and execution risks. Kula’s projects, including the high-grade Mt Palmer Gold Project and the Wozi Niobium Project in Malawi, require substantial ongoing exploration expenditure. By merging with Forrestania, shareholders gain exposure to a larger, more liquid entity with a stronger balance sheet and greater capacity to advance the combined portfolio.

Thirdly, shareholders will retain upside potential. Post-transaction, Kula shareholders (excluding Forrestania’s existing 13% stake) would own approximately 20% of the merged group, allowing continued participation in the development of Kula’s assets alongside Forrestania’s established gold projects.

Key Terms and Conditions of the Offer

The offer is conditional on customary terms, including a minimum acceptance threshold of 50% of Kula shares. Should Forrestania acquire 90% or more, it intends to compulsorily acquire remaining shares, consolidating full ownership. The offer period closes at 4pm AWST on 8 January 2026, subject to extension.

Kula’s directors have committed to accept the offer for their own shares, signaling confidence in the bid’s value. However, shareholders are cautioned that the implied value of the offer fluctuates with Forrestania’s share price, which may impact the ultimate consideration received.

Risks and Considerations for Shareholders

While the board recommends acceptance, the Target’s Statement outlines risks including exploration uncertainties inherent in junior mining companies, potential capital gains tax liabilities arising from the share exchange, and the possibility of becoming minority shareholders if the offer proceeds with less than full acceptance.

Forrestania itself is in the midst of several acquisitions, some subject to legal proceedings, which introduces an element of execution risk for the combined entity. Shareholders are advised to consider their personal circumstances and seek professional advice before deciding.

Strategic Implications

This proposed consolidation reflects a broader trend in the gold exploration sector, where scale and financial strength are increasingly critical to advancing projects through exploration to production. Forrestania’s strategy to build a diversified portfolio across Western Australia’s premier gold districts aligns with this approach, and the acquisition of Kula’s assets complements its existing holdings.

For Kula shareholders, the offer presents an opportunity to crystallise value and participate in a larger, potentially more resilient gold exploration and development company.