Auzex Resources and GGG Resources in all scrip merger, to fast track 2.6m gold ounce Bullabulling

Auzex Resources (ASX: AZX) and GGG Resources (ASX: GGB; AIM: GGG) have elected to enter an all scrip merger to overcome differences that should see the Bullabulling project developed at a faster pace.

An agreement will combine the 2.6 million ounce Bullabulling Gold project, (previously a 50:50 joint venture), under a single corporate entity to be named Bullabulling Gold.

The new entity will be Australian domiciled and listed on the ASX and AIM markets.

Chris Baker, chairman of Auzex Resources, commented on the transaction and said, “This transaction delivers an outstanding outcome for all parties, it has been complex to structure and negotiate due to requirements of both parties ensuring the interests of all shareholders was recognised and that they benefited equally from the outcome.

"This merger will provide the opportunity to unlock significant value for both parties and ensure the fast-track development of the Bullabulling Gold project at a critical time in its development.”

The outcome

The deal will create an advanced exploration / pre development gold-focussed company, which will wholly own the Bullabulling Gold project - which is strategically located 65 kilmoetres south-west of Kalgoorlie, in Western Australia.

The merger outcome is Auzex and GGG shareholders own 50% each of Bullabulling Gold, subject to adjustment for cross share holdings and relative cash holdings.

The merged entity’s pro-forma diluted market capitalisation post completion will be around A$95 million.

Auzex will also demerge the company's non-Bullabulling assets.

Transaction mechanics

The transaction requires the implementation of two schemes:

- GGG will create an Australian registered company called Bullabulling Gold and go through a UK Scheme of arrangement to exchange each ordinary share, warrant and option in GGG for an equal number of shares, warrants and options in Bullabulling Gold.
Bullabulling Gold will then seek admission to the Australian Stock Exchange, with a secondary listing on the AIM market.
- All scrip merger of equals of Auzex and Bullabulling Gold by Scheme of Arrangement with Auzex shareholders to be issued new Bullabulling Gold shares - for their Auzex shares held.
- Existing Auzex options to be exchanged for equivalent options, or converted into shares in Auzex prior to Scheme taking effect.
- The directors of Bullabulling Gold will consist of two non-executive directors nominated by Auzex and two non-executive directors nominated by GGG.
Bullabulling Gold will appoint 3 new independent directors including the chairman and managing director.

The formation of Opco

Immediately upon execution of the Agreement, Auzex and GGG will form a management company, to be named Opco, to be equally owned.

This entity will immediately assume management of the Bullabulling Gold Project to deliver upon the agreed development strategy.

The board of OpCo will initially comprise 3 directors from each of Auzex and GGG with Chris Baker and Nigel Clark acting as co-chairman, until a new chairman is appointed.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/19054/auzex-resources-and-ggg-resources-in-all-scrip-merger-to-fast-track-26m-gold-ounce-bullabulling-19054.html