Why the Beadell Resources Ltd (ASX:BDR) share price rocketed 21% higher on Monday

The Beadell Resources Ltd (ASX:BDR) share price was a big mover on Monday. Here's why the gold miner's shares rocketed 21% higher…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Gold miners such as Northern Star Resources Ltd (ASX: NST), Regis Resources Limited (ASX: RRL), and St Barbara Ltd (ASX: SBM) may have dropped significantly lower on Monday after a fall in the gold price, but one of their industry peers bucked the trend with an impressive gain.

The Beadell Resources Ltd (ASX: BDR) share price was one of the best performers on the market on Monday, finishing the day 21% higher at 6.9 cents.

Why did the Beadell Resources share price rocket higher?

This afternoon the embattled gold miner advised that it has entered into a scheme implementation deed with US-listed peer Great Panther Silver Limited.

According to the release, the Scheme will see Great Panther acquire all of the issued ordinary shares of Beadell by means of a scheme of arrangement under the Australian Corporations Act 2001.

Key highlights of the transaction include the creation of a new emerging and growth-oriented precious metals producer with a strong balance sheet, robust growth profile, geographic diversity, and a diverse asset portfolio including three producing mines, an advanced stage project, and significant exploration potential.

In addition to this, management believes the transaction could result in an attractive re-rating.

The directors of Beadell have unanimously recommended that shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to the independent expert opining that the Scheme is in the best interests of shareholders.

Major shareholders Equinox Partners and Donald Smith & Co. have agreed to vote in favour of the scheme, in the absence of a superior proposal.

What offer has been made?

Under the terms of the Scheme, Beadell shareholders will receive 0.0619 common shares of Great Panther for each ordinary share of Beadell, resulting in the issuance of approximately 103.6 million Great Panther Shares.

This offer implies a consideration of A$0.0863 per Beadell share, which is a 51% premium to the last close price. It also implies an equity value for Beadell of approximately A$144 million.

What now?

This time last year Beadell Resources' shares were trading as high as 21 cents, so longer term shareholders may be a touch disappointed to see an offer of 8.63 cents being made by Great Panther and recommended by management.

However, if they hold onto those shares instead of selling them then all is not lost and they could end up benefiting greatly from the growth potential of the two combined companies. Though, only time will tell if the combination is a success.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Rising gold share price represented by a green arrow on piles of gold block.
Share Gainers

2 ASX All Ords stocks that would already have more than doubled your money this year

These ASX All Ords stocks have gained 126% and 145% year to date. But how?

Read more »

Ten smiling business people wave to the camera after receiving some winning company news.
Share Gainers

Here are the top 10 ASX 200 shares today

It was an historic day for the ASX, with the market setting a new record.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Fletcher Building, Johns Lyng, Pilbara Minerals, and Zip shares are charging higher

These shares are having a strong session on hump day. But why?

Read more »

A cool dude looks back at the camera while ziplining above the treetops.
BNPL shares

Zip share price rockets 19% on full-year earnings upgrade

Surging again today, Zip shares are now up 127% since their recent April lows.

Read more »

happy teenager using iPhone
Share Gainers

Up 96% since April, should I still buy Life360 shares today?

A leading expert offers his verdict on the growth outlook for the surging Life360 share price.

Read more »

Businessman smiles with arms outstretched after receiving good news.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a lucrative return to trading for investors this Tuesday.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Austal, Botanix, DroneShield, and NextDC shares are storming higher today

These shares are starting the week with a bang. But why?

Read more »

A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles as the Whitehaven Coal share price rises today
Share Gainers

The Coronado Global share price just surged to a 114% weekly gain. Here's why

Investors have sent the ASX coal stock flying higher in June. But why?

Read more »