Alkane-Mandalay Merger Reshapes Mid-Tier Gold Landscape

May 21, 2025

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Interview with
Nick Earner, MD of Alkane Resources
Frazer Bourchier, President & CEO of Mandalay Resources

Recording date: 19th May 2025

Alkane Resources (ASX:ALK) and Mandalay Resources (TSX:MND) have announced a strategic "merger of equals" that will create a significant mid-tier gold producer. The all-share transaction values Mandalay at A$559.1 million ($357.8 million), with Mandalay shareholders receiving 55% ownership of the combined entity and Alkane shareholders retaining 45%.

The merged company will operate under the Alkane Resources name, trading on both the ASX and TSX exchanges. It will maintain a diversified portfolio of three producing mines - Tomingley (Australia), Costerfield (Australia), and Björkdal (Sweden) - with an anticipated annual production of 160,000-180,000 gold equivalent ounces.

Financial projections for the combined entity are robust, including over $100 million USD in cash, zero debt, and approximately $200 million USD in annual free cash flow. This represents a cash flow multiple of approximately 3:1, compared to the industry standard of 4-5x EBITDA.

"This company will have over $100 million US in net cash positive with no debt," noted Frazer Bourchier, President and CEO of Mandalay Resources, highlighting the strong financial foundation of the merger.

A key strategic rationale for the combination is achieving "capital relevance" through a pro-forma market capitalization of approximately $650 million USD. This scale should qualify the company for inclusion in both the ASX 300 index and the GDXJ (VanEck Junior Gold Miners ETF), potentially attracting institutional investors previously unable to invest due to size limitations.

The merger has received unanimous board approval from both companies and secured voting support agreements from key shareholders. Shareholder votes are expected in June 2025, with transaction closing anticipated by August 2025.

The combined entity will pursue a disciplined capital allocation strategy focused on organic exploration, M&A opportunities, and potential shareholder returns, operating with a philosophy of empowered site-level leadership and minimal corporate oversight.