Aurum Resources Ltd (ASX:AUE) and Mako Gold Ltd (ASX:MKG) are pursuing a merger to progress gold exploration and development in West Africa, in particular seeking to advance the Napié and Boundiali Projects in northern Côte d’Ivoire.

The two companies have entered into a Bid Implementation Agreement through which Aurum would acquire all of Mako Gold’s issued shares as well as 100% of two classes of unlisted options via an off-market takeover bid.

According to this plan, Aurum would offer 1 of its own shares for 25.1 Mako shares, with this representing an offer price of $0.018 per Mako share. Additionally, Aurum would offer 1 Aurum share for every 170 Class A Options, and 1 Aurum share for every 248 Class B Options.

The offer has been argued to represent a 112% premium for Mako shareholders based on the 30-day VWAP (volume weighted average price) of A$0.00855.

Upon completion of the merger, Mako Gold shareholders would hold a 20.5% stake in the resulting entity, with Aurum shareholders owning the remaining 79.5%.

A strong cash balance of $20 million between the two companies would also underpin the deal.

Activity is set to ramp up following the merger, as Aurum already has 6 company-owned drill rigs operating at Boundiali, and has ordered 2 new diamond drill rigs ready for deployment following completion of the deal.

Aurum managing director Dr Caigen Wang said he was looking forward to the two companies uniting their know-how.

“The Aurum team is excited to apply our skills to the Napié Project, which we consider has great potential to quickly evolve into a multi-million-ounce project with a dedicated owner-operated multi-rig drilling programme which can be delivered at a cost significantly below standard contract rates,” he said.

“We look forward to collaborating with the strong Mako technical team to marry their exploration skills with our exploration and cost efficiencies to drive benefits for all of our shareholders.

“Between driving growth at Napié and being well on the path to delivery of a maiden resource at our own Boundiali Project later this year, we see strong potential for Aurum to become a strong emerging gold developer in Côte d’Ivoire with two assets with long-life potential in close proximity to each other.”

Aurum has been trading at 47 cents, and Mao Gold has been trading at 0.9 cents.

Join the discussion: See what HotCopper users are saying about Aurum and Mako Gold and be part of the conversations that move the markets.