How Will the Spitfire–Excelsior Merger affect Share Price?

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The Spitfire–Excelsior merger came at a convenient time for Spitfire, as the last year has proven lacklustre for its share price and shareholders. The Spitfire Materials Ltd [ASX:SPI] share price has consistently been decreasing. Around this time last year, shares were trading at $0.14 on 3 August, and in that year shares have dropped 42%. They were trading $0.08 at yesterday’s close, 31 July.

Today SPI’s shares are up 1.32%.

The merger between Spitfire Materials and Excelsior Gold Ltd [ASX:EXG] will be implemented through a Scheme of Arrangement, awarding Spitfire as the surviving entity.

Benefits of the Spitfire–Excelsior merger

The upcoming merger will house three representatives from SPI and three from EXG, being: John Young (managing director), Neil Biddle (executive director), Peter Buttigie (Non-executive director), David Hatch (non-executive chairman), Rowan Johnston (executive director) and Sam Randazzo (non-executive director), respectively.

For every 2.208 Excelsior shares held, shareholders of Excelsior will receive 1 spitfire share.

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Although the full effects haven’t been felt just yet in relation to Spitfire’s share price, its rapid growth and expenditure should be something all investors consider.

The merger will bring immediate growth, as well as an enhanced and diversified asset portfolio and project pipeline for the company.

It will fast track SPI and EXG’s neighbouring North Kalgoorlie gold projects, as well as providing a strong foundation to develop a new standalone West Australian gold production.

Another benefit which could potentially affect SPI’s share price is its greater market presence, with a pro-forma market capitalisation of $82 million.

What the Spitfire–Excelsior merger means for all shareholders

As explained, the merged Entity will combine the resources and presence of both Spitfire and Excelsior, meaning it will now comprise:

  • Resources: 2.1 Moz, with 0.825 MOZ carried form EXG and 1.26 from SPI
  • Landholding
  • Shares on issue
  • Market cap

Importantly, the merger is expected to increase liquidity and scale of the combined company. It should lead to enhanced financial strength and optimised funding of combine projects. As well exposure to global and expanding investor base, which might attract greater opportunities in the Northern Goldfields.


Ryan Clarkson-Ledward,
For Money Morning

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