Speculation is mounting that Vault Minerals – the company previously known as Red 5 – could soon move to buy out its gold hedge book in a move that would likely provide a lift to its share price.
With the gold price trading at record highs, Vault receives less for its precious metal than it would if price hedging contracts had not been locked in.
To do this, it could set the company back about $200m but would likely offer a lift to its share price, currently hobbled by the hedging contracts in place.
Vault, run by Luke Tonkin, is the result of a merger between Silver Lake Resources with the $1.2bn Red 5 that unfolded earlier this year.
The deal is expected to be just the first step towards the additional consolidation of gold miners in Western Australia’s Leonora district, with the next being a swoop on the merged entity from the Raleigh Finlayson-led Genesis Minerals.
While Genesis is currently trading with a $2.7bn market value, the same value as Vault, which sets it up for a merger of equals, most expect Genesis Minerals to refrain from further mergers and acquisitions until next year once it has bedded down earlier deals.
Genesis bought the Australian business of St Barbara last year.
Genesis Minerals has been busy bedding that deal down, which meant a purchase of Red 5 – while a logical step for Genesis – was always expected to happen down the track.
But with Silver Lake – the company it fought with for the St Barbara assets – buying an 11 per cent stake in September last year, Silver Lake then appeared to be in the box seat for a takeout.
The King of the Hills mine and processing plant around WA’s Leonora gold mining district are Vault’s flagship assets.
The open pit and underground gold mine is 28km north of Leonora and 80km south of the company’s underground Darlot satellite gold mine in the Eastern Goldfields of WA.
NAB weighs return to Scottish roots
The $1bn-plus sale process for the non-bank lender Scottish Pacific is yet to start in earnest, but there’s one party that has already been at least kicking the tyres.
Crown owner Blackstone fancied to snap up Star
There’s talk that the New York-based private equity firm is once again having some serious conversations in the background about taking over Star Entertainment.