Regis Resources bows out of Vault Minerals contest after Genesis Minerals’ superior bid for gold miner

An eleventh-hour bid by Raleigh Finlayson’s Genesis Minerals to prize Vault Minerals away from rival Regis Resources has done the job. Regis — which had almost sewn up a “merger of equals” deal for the King of the Hills gold miner after lobbing a $10.7 billion tie-up proposal in May — on Monday revealed it would not submit a counter to Genesis’ superior offer. “The Regis board concluded that the terms that would be required to match the Genesis proposal do not meet the value and return thresholds that Regis applies to all growth opportunities,” it told investors. “Maintaining this discipline is fundamental to how Regis creates long-term value for shareholders.” Regis was just a couple of months away from completing the deal to secure Vault via a consideration of 0.6947 Regis shares for each Vault share held. Genesis spoiled the party last Monday with a bid of 0.7629 of its shares plus 47.5¢ in cash for each Vault share held, valuing Vault at $5.6b. Regis’ offer for Vault was worth around $5b. For Vault shareholders, Regis’ proposal would have left them owning 49 per cent of the merged company while the rival bid would deliver 59.8 per cent of the enlarged group to Genesis. Under matching rights provisions in a scheme implementation deed signed in May 4, Regis had until the end of Monday to counter Genesis’ offer. The Jim Beyer-led Regis said it expects to collect a $50.7m break fee from Vault when it accepts Genesis’ proposal on Tuesday morning. Regis holds the Duketon hub near Kalgoorlie and also has a 30 per cent stake in the giant Tropicana gold mine with operator AngloGold Ashanti. Unlike Genesis, Regis had no immediate operational synergies with Vault. Regis made the offer for Vault amid its key growth project, McPhillamys in NSW, being stuck in regulatory limbo. The mid-tier producer said it remained in a position of strength, underpinned by a debt-free balance sheet with $1.2b in cash and bullion and a “clear pathway of organic growth opportunities”. The knock-out blow for Vault came just weeks after Genesis wrapped up a $640 million deal to buy Magnetic Resources. Genesis had previously said the Magnetic deal said would “complete” the “puzzle” of its consolidation strategy in the Leonora-Laverton region. The combined Genesis-Vault entity will be worth about $12.6b and produce between 600,000 and 700,000 ounces of gold a year, making it third-largest Australian-based gold producer — trailing Northern Star Resources and Evolution Mining. Genesis said the Vault deal would also unlocking an estimated $1.5b in pre-tax “synergies” over 10 years. Processing ore from Genesis’ new Tower Hill development at Vault’s nearby King of the Hills mill — rather than building its own processing facility — would alone save $715m, the suitor said last week. Genesis put a $280m price tag on building a mill for Tower Hill. The remainder of the $715m mainly relates to costs saved from not expanding its Laverton mill.