Regis Resources still keen on McPhillamys after absorbing Vault Minerals to create $10.7b WA-based gold major

Regis Resources will not stop pursuing the controversial McPhillamys gold development even after unlocking new growth avenues by joining forces with Vault Minerals via a $10.7 billion deal. Under a proposed scheme of arrangement revealed on Tuesday, Vault shareholders are to receive 69.5 per cent of a Regis share for each Vault share held. This gives Regis 51 per cent control of the merged entity, which will have enterprise value of about $10.7b to make it the third-largest Australian-based gold producer. Northern Star Resources and Evolution Mining hold the top two spots. The merger would bring together five operating gold mining assets across WA with a combined annual output of more than 700,000 ounces at a time when the price of gold, while off its record high, remains strong at around $US4500/oz. Regis holds the Duketon hub near Kalgoorlie and also has a 30 per cent stake in the giant Tropicana gold mine with operator AngloGold Ashanti. Jim Beyer, who is the boss of Regis and the proposed chief of the merged entity, rebuffed suggestions that exposure to Vault’s growth options would put McPhillamys on the backburner. McPhillamys is Regis’ key growth project but is stuck in regulatory limbo. Former environmental minister Tanya Plibersek in August 2024 essentially blocked the development in regional New South Wales based on Aboriginal heritage concerns relating to a creation story about a mythical blue-banded bee. “I don’t think McPhillamys will be too much of a mountain to climb, I think the question is just timing . . . it’s not a matter of if, but when,” he told The West Australian. “We’re waiting for the judicial review process to play out, even if that is unsuccessful, and we believe it will be successful, but even if it isn’t we’ve got another pathway that we’re working on. “The merger with Vault really gives us breathing room to be patient and makes it a little easier for us to pursue and perhaps undertake something before McPhillamys is up and running.” Vault counts operations in Leonora, Mt Monger and the Mid West among its portfolio and last month reaffirmed its full-year production target of between 332,000 and 360,000oz. The Luke Tonkin-led Vault is also working to restart the Sugar Zone mine in the Canadian province of Ontario — a mine which it picked up in 2022. There are minimal operational synergies in the Regis-Vault tie-up but $500 million of “corporate tax benefits” are expected to be realised. This tax windfall comes from an revaluation uplift in asset values based on Regis’ acquisition price of Vault, meaning the new entity can claim bigger tax deductions for asset depreciation every year. Shares in Regis were down 4.3 per cent to $6.86 by 11.25am, while Vault’s rose 5.3 per cent to $4.74. Mr Beyer said a “market overreaction in both ways” was normal in the immediate wake of a large deal and he expected it would take a few days for investors to fully digest merits of the merger. Under the scheme deal, Vault’s chair Russell Clark would lead the new entity’s board while Mr Beyer would remain chief executive. Four directors from each would be on the new board. Mr Tonkin said the merger represents a “compelling opportunity” for his company’s shareholders. “It allows them to retain meaningful ownership and governance influence while gaining exposure to a larger, more resilient gold company with enhanced scale, diversification and balance sheet strength,” he said. “Vault’s portfolio, anchored by the King of the Hills operation currently undergoing a significant mill expansion, brings long life high quality assets and a strong financial position to the merger.” The meeting for Vault shareholders to vote on the deal is set to occur in August or September.