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Anatolia and Avoca to merge into new company Alacer Gold

|Includes: ALIAF, Avoca LLC (AVOA)

Turkish gold explorer Anatolia Minerals Development (TSX: ANO) and Australian junior exploration company Avoca Resources (ASX: AVO) have announced they will merge to create a new intermediate global gold producer with a market capitalization of approximately US$2 billion, to be called Alacer Gold Corp. Upon completion of the deal, each company will have an approximate 50% stake in Alacer.

Under the terms of the merger, which is to be structured as a scheme of arrangement under Australian law, each Avoca shareholder will receive 0.4453 Anatolia shares per Avoca share.

The consideration represents a premium of approximately 9% to Avoca shareholders based on Avoca`s last closing share price prior to the announcement.

The combination of the two companies will see benefits from future productions of four operations, multiple cash flow streams and geographic diversification. Alacer Gold forecasts production of 600koz in the calendar year of 2013 and 800koz in 2015; the company will have combined gold reserves of 3.5moz and gold resources approaching 15.0moz.

The newco will also benefit from a joint listing on both the Toronto and Australian Stock Exchange and an increased market capitalization, which will facilitate greater access to capital and increased liquidity, said Anatolia and Avoca.

"Avoca and Anatolia's asset portfolios are highly complementary and also provide both companies with greater optionality to take advantage of the extensive exploration portfolios in both Australia and Turkey, respectively. This merger clearly offers value creation and return potential exceeding that offered by Avoca and Anatolia as individual companies," said managing director of Avoca, Mr. Rohan Williams.

Following completion of the merger, Alacer Gold's board of directors will have nine members, with four from each current Anatolia and Avoca boards of directors, plus one representative from Pala Investments, Anatolia and Avoca`s largest shareholder.

Current Avoca chairman Rob Reynolds will assume the role of non-executive chairman of Alacer Gold, while current Anatolia president and CEO Ed Dowling will serve as CEO and director of the newco, and current Avoca managing director Rohan Williams will become chief strategic officer and director of Alacer.

The company will continue to operate corporate and administration offices in Denver USA, Ankara, Turkey and Perth, Australia.

Both companies have also agreed to pay a termination fee of A$10 million, should either consider a competing offer.

The deal is still subject to customary conditions and Australian and Canadian regulatory approvals, as well as the approval of at least 75% of Avoca shareholders.

Special shareholder meetings for each company to vote on the the deal are expected to be held in mid-December 2010, with the completion of the merger anticipated at the end of December, or in early 2011.

The board of directors of Anatolia and Avoca have agreed to recommend the deal to their shareholders in the absence of a better proposal. Pala has already said that it intends to support the support the merger.

BMO Capital Markets advised Anatolia on the deal, while Goldman Sachs looked after Avoca.

Anatolia is an emerging gold producer and minerals explorer in Turkey. The company is developing the Çöpler Gold Project, which hosts gold reserves and resources in excess of 6moz and remains open. Construction for the initial oxide phase at Çöpler is fully permitted and funded. First gold pour is slated for the fourth quarter of 2010.

Growth opportunities for Anatolia drive from a pipeline of precious and base metals properties and a strategic alliance with Çalik Holding through its subsidiary Lidya Mining. Longer-term prospects include two nearby copper/gold porphyry deposits - Cevizlidere and Karakartal - and numerous grassroots prospects throughout Turkey.

Avoca is an S&P / ASX 200 gold mining and exploration company based in Perth, Western Australia.  This year, the company is forecasting gold production of 280,000 ounces and  400,000 ounces of production by fiscal year 2013. The company`s 100% owned Higginsville Gold Operation has grown into a large gold production centre with a forecast production level for fiscal year 2011 of 190,000 ounces.

Following the acquisition of Dioro, Avoca now has the dominant position on the Kalgoorlie to Norseman gold belt. Avoca owns two 1.2 million tonne per annum treatment plants, has reserves of over 1.3 million ounces of gold and a resource base of 6.7 million ounces; as well as over 3,800km2 of prospective exploration ground.



Disclosure: no position