Doray Minerals Share Price Yo-yos upon Merger Update

This morning Doray Minerals Limited [ASX:DRM] gave an update on its proposed merger with Silver Lake Resources Limited [ASX:SLR]. There was talk of a potential merger back in November between the two gold miners.

But the news appeared to bring mixed results when it came to Doray Minerals’ shares, as its price yo-yoed following the announcement. DRM shares have been climbing over the last six months.

At the time of writing, Doray Minerals’ share price is trading slightly higher at 50 cents, up 2.04%.

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Doray Minerals merger details

The merger between the two gold miners is by means of a share scheme arrangement and option scheme arrangement, in accordance with the Scheme Implementation Deed (reported on the ASX in 14 November 2019).

The proposed merger has gained support from Doray’s largest shareholder (Perennial Value Management), in a written statement stating its intention to vote its shares in favour, if there is no better merger proposal.

Doray Minerals’ Managing Director, Leigh Junk commented on Perennial support, saying:

It is pleasing to have received this commitment from Perennial, which represents a significant vote of confidence in the merits of the proposed merger for Doray shareholders.

As disclosed in the scheme booklet, the merger with Silver Lake will allow Doray shareholders to participate in the creation of a mid-tier gold company with two complementary and established gold camps in a Tier 1 mining jurisdiction.

The Scheme Booklet also disclosed that the merged group is expected to receive increased investor interest due to operational diversity, strong free cash flow generation and the balance sheet strength to pursue and fund growth opportunities embedded in the portfolio to maximise the full potential of existing operations.

The Independent Expert has concluded that, in the absence of a superior proposal, the merger is fair and reasonable and in the best interests of Doray shareholders.

Doray Minerals share price outlook

Not much can be said for the forecast of Doray Minerals shares, at the present time.

Investors and shareholders alike will have to wait for the Scheme meeting, set to take place next week, 22 March 2019.

And as expected each vote is important for the future of Doray Minerals’ potential share price. Voters must register by 20 March, 4.00pm (Perth time) to be eligible to vote at the Scheme Meeting.

Naturally, the outcome of the Scheme Meeting will affect how well Doray Minerals shares are trading — so investors may want to wait it out and see the outcome.

But ideally, you want a stock that is moving higher steadily and consistently which is how Doray Minerals appears to be — despite today’s turbulence.


Ryan Clarkson-Ledward,
For Money Morning

PS: If you’re unsure about which mining stocks are for you, check out this FREE report: 10 ASX Resource Stocks You Should Be Watching. Download now.

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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