07:25 AM EDT, 04/08/2024 (MT Newswires) -- Karora Resources Inc. ( KRRGF ) and Westgold Resources Ltd. overnight Sunday said that Westgold has agreed to buy 100% of the issued and outstanding common shares of Karora.

Karora shareholders will receive 2.5241 Westgold fully paid ordinary shares, A$0.68 (C$0.611) in cash, and 0.30 of a share in a new company to be spun out from Karora for each Karora share held at the closing of the deal. The offer consideration represents about A$6.60 (C$5.902) per Karora share based on Westgold's closing share price on the ASX of A$2.28 on April 5.

SpinCo's assets will comprise Karora's existing 22.1% interest in Kali Metals Ltd. , a 1% lithium royalty on certain mining interests held by Kali, the right to receive a deferred consideration payment due to Karora relating to the on-sale of the Dumont asset and A$6 million in cash. SpinCo will be owned 100% by existing Karora shareholders.

Upon completion of the deal, Westgold shareholders will own about 50.1% of the combined company and former Karora shareholders will own about 49.9%.

Enlarged Westgold will have a market capitalization of about A$2.2 billion. The Enlarged Westgold will apply for quotation of its Westgold Shares on the TSX following the closing of the deal.

The deal has been unanimously approved by the boards of both companies. Karora's board will recommend that the shareholders vote in favor of the deal.