Alkane Resources Ltd (ASX:ALK, OTC:ALKEF) has secured a key approval for its proposed merger with Mandalay Resources Corp. (TSX:MND, OTCQB:MNDJF), receiving a green light from Swedish authorities. The approval from the Swedish Inspectorate of Strategic Products confirms no further action will be taken under Sweden’s Foreign Direct Investment (FDI) Act, allowing the transaction to move ahead under Swedish law.
The merger, described as a “merger of equals”, is still subject to approvals from the Supreme Court of British Columbia, the Foreign Investment Review Board (FIRB) of Australia, shareholders of both companies and other customary conditions. Shareholder meetings are expected in late July 2025.
A few weeks ago, Edison Investment Research upgraded its valuation outlook for the proposed merger, describing the transaction as “demonstrably earnings accretive”.
Under the terms of the proposed deal, Mandalay shareholders will receive 7.875 Alkane shares for each Mandalay share held. This will result in Mandalay shareholders owning 55% of the merged entity, while Alkane shareholders will retain the remaining 45%.
The combined company will have an estimated market value of around A$1 billion and operate three producing gold assets — Tomingley and Costerfield in Australia, and Björkdal in Sweden. Production is forecast to reach approximately 180,000 ounces of gold equivalent in 2026.
The all-in sustaining cost (AISC) for the enlarged group is expected to average about A$2,160 per ounce, underpinning the earnings-accretive nature of the merger.
Alkane managing director Nic Earner will lead the combined company, supported by a board comprising nominees from both companies and chaired by mining veteran Andy Quinn.
"The transaction will take Alkane to a new level, bringing together two companies with complementary assets and a shared vision for growth,” Earner said when the merger was announced.
“Mandalay’s two high-quality mines match the attributes of Tomingley: a proven history of consistent production, cash generation and exploration upside.
“The combination of assets, leadership, and supportive long-term shareholders enhances our scale and financial strength, and positions us well to continue to pursue additional growth opportunities.”
Read more: Alkane and Mandalay agree to merger, creating diversified gold and antimony producer
About the merger and what it means
Alkane aims to create a diversified Australian-centric gold and antimony producer through its merger with Mandalay. If approved, the transaction will combine three operating mines under one entity and create a company with a stronger balance sheet and increased production scale. The unified group would benefit from Mandalay’s international assets and Alkane’s established presence in Australia.
Alkane’s flagship asset is the Tomingley Gold Operations in Central West New South Wales, in production since 2014 with operational plans extending beyond 2030. The company has also demonstrated consistent exploration success, particularly between Tomingley and Peak Hill, areas that may contribute additional ore to its main operations.
Boda discovery and further growth potential
A significant milestone in Alkane’s exploration history was the 2019 discovery of porphyry gold-copper mineralisation at Boda. Supported by a positive scoping study, Alkane continues drilling in the region and is pursuing an economic development pathway. These efforts highlight the company’s strategy to strengthen Central West New South Wales’ position as a key gold and copper hub.
Beyond its core projects, Alkane holds strategic investments in several Australian gold exploration and development companies. These investments align with its goal to expand its gold footprint and build a multi-asset portfolio.