Supreme Court Approves Merger of Silver Lake and Red 5 Resources - New Mid Tier Powerhouse?

It's been an eventful week for Silver Lake and Red 5 Resources, as the Supreme Court of New South Wales has approved their merger bid.

Yesterday, the Supreme Court issued orders approving a scheme of arrangement under which Red 5 will acquire 100% of Silver Lake shares.

Silver Lake plans to lodge an office copy of the Court’s orders with the Australian Securities and Investments Commission today, making the scheme legally effective.

Once the scheme is implemented, Silver Lake will delist from the ASX, and new Red 5 shares will begin trading on June 20.

Silver Lake shareholders endorsed the merger earlier this week.

The merger will create a diversified mid-tier gold company, producing approximately 445,000 ounces per year, establishing the combined entity as a prominent mid-tier company.

In September 2023, Silver Lake acquired 11% of Red 5’s shares. Now, Silver Lake shareholders will receive 3.434 Red 5 shares for every Silver Lake share they hold.

In a presentation announcing the merger, both companies stated it would “provide Red 5 and Silver Lake shareholders with the opportunity to participate in a stronger combined group, delivering benefits not available on a standalone basis.”

The merged group’s management team will be led by Luke Tonkin from Silver Lake as managing director and chief executive officer. He will be supported by Richard Hay from Red 5 as chief operating officer and Struan Richards from Silver Lake as chief financial officer.

Upon finalizing the merger, the company will own four gold projects: King of the Hills (KOTH), Deflector, and Mount Monger in WA, and Sugar Zone in Ontario, Canada.