FREEHILLS LAWYERS and Mallesons Stephen Jaques represented Oceana Gold and Climax Mining respectively on their agreement to merge by scheme of arrangement, announced last week.
The merger will result in a company with two operating gold mines, a succession of projects in the pipeline, and a market capitalisation of more than $500 million. The deal was agreed to unanimously by both boards and the company will be known as Oceana Gold.
Under the terms of the merger, Climax shareholders will receive 0.62 of a share of Oceana for each share of Climax. In addition, Climax shareholders will receive 0.31 of an option to acquire Oceana shares for 0.925 cents maturing in 30 months for each share of Climax. Existing Climax option holders will receive equivalent value for their options.
John Tivey, a partner in Freehills’ infrastructure group, said the deal was significant for Oceana, setting it up to become a 500,000 ounce gold producer within two years. “It will mean they are on the radar screen of investors internationally.”
Oceana’s assets included dominant landholdings in two of New Zealand’s major goldfields, Macraes and Reefton, as well as two new development projects and a large new gold discovery at Sams Creek. Climax’s principal development asset is the Dinkidi gold and copper deposit in the Philippines.
Neil Pathak, a Freehills partner focused on mergers and acquisitions, said the merger would combine the “very stable cash flow” of Oceana’s New Zealand operations with the higher growth “pizzazz” of Climax, and was a win for both companies.
Freehills had previously advised Oceana in relation to a sell down by its major shareholder, which went from a 60 per cent holding to a 6 per cent holding.
Tivey’s prior experience with mining companies in the Philippines enabled Freehills to play a big role on due diligence into Climax’s Philippines mining development.
“When the client was approached in relation to this particular opportunity, we were able to assist them in a much broader role than would typically be provided by a law firm,” Tivey said. “I was able to introduce them to the relevant government officials, and also a range of other industry contacts, which enabled them to get an idea of doing business in the mining sector in the Philippines.” This gave Oceana the ability to quickly form a view and confidently make a decision at board level.
“We provided effectively the socio-political overview as well as the core legal due diligence work.”
Nicholas Pappas is the lead partner for Mallesons on the merger, assisted by partner Jason Watts.
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