The board of Siren Gold (ASX: SNG) has rejected a proposal by private Australian company Federation Mining to merge the two companies into a high-quality gold explorer focused on development opportunities in New Zealand.

Federation’s proposed merged entity would have its Snowy River mine project on the nation’s South Island as the cornerstone production-ready asset.

Snowy River holds approximately 1.9 million ounces of gold resources with a large footprint in the prospective Reefton goldfields.

All-scrip proposal

The proposal was to be effected via an all-scrip acquisition of 100% of the shares in Federation, with an exchange ratio of 1.83 Siren shares for every Federation share after the conversion of all existing convertible notes held by Federation’s major shareholder, AustralianSuper.

The resultant indicative ownership ratio between Siren and Federation shareholders was expected to be 10% and 90% respectively on a fully diluted basis.

Siren’s board members evaluated the proposal and announced this afternoon that they would not be able to accept it on the current terms.

Reefton divestment

Federation’s Snowy River mine is surrounded by Siren’s Reefton project, the subject of a $20 million cash-and-shares divestment to private Canadian explorer RUA Gold.

RUA currently holds three permits in the Reefton Goldfield covering over 342 square kilometres and including orogenic and epithermal gold targets with historical production grades of up to 60 grams per tonne.

Siren’s board said it did not consider Federation’s proposed merger to be a superior proposal to the current definitive agreement with RUA Gold, which will be voted on by Siren shareholders this week.

Snowy River history

The historic Snowy River project dates back to 1905 when Birthday Reef was discovered by a small prospecting group.

Mining commenced soon after, and the operation continued for 45 years, producing about 733,000oz of gold from the Blackwater and Prohibition shafts to a depth of 800m across 16 levels.

The mine was still operating in profitable ore when the collapse of the Blackwater shaft in 1951 resulted in the operation’s closure.

Snowy River is still considered one of the richest and most consistent gold reefs discovered anywhere in the world.

Fully-permitted operation

The Snowy River operation is fully permitted, with twin decline underground access and multiple ore drives already established at Birthday Reef.

Engineering activities are well advanced, with initial earthworks completed to clear a suitable platform for the construction of a processing plant.

Federation is currently undertaking additional drilling to enhance the understanding of Birthday Reef at depth.

When production commences in 2026, Snowy River is expected to become a major employer on New Zealand’s west coast and provide significant input into the regional economy.