Northern Star and Saracen Mineral Share Prices Drop on Court Hearing

Gold mining giants Northern Star Resources Ltd [ASX:NST] and Saracen Mineral Holdings Ltd [ASX:SAR] are both trading lower day upon results of the first court hearing regarding the proposed merger of both companies.

Earlier this year the two gold mining giants agreed to terms whereby NST will acquire 100% of the shares in SAR via a Saracen scheme of arrangement.

ASX NST - ASX SAR - Northern Star and Saracen

Source: Tradingview

At time of writing the NST and SAR share prices are down 6.12% and 5.85% to trade at $12.21 and $4.59 per share, respectively.

Merger looks to go ahead

In a joint announcement made today, the companies provided and update from their first court hearing on the merger.

Yesterday, the Supreme Court of Western Australia 2020 made orders that SAR convene a meeting of SAR shareholders to consider and vote on the merger.

And approved the dispatch of an explanatory statement providing information about the merger and notice of the meeting.

Essentially giving the go ahead for the pair to allow SAR shareholders to vote on the proposed merger.

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So, what’s the deal with the share price action today?

Back in August we saw a big jump in both share prices when the potential merger was first announced.

But today shares have fallen on the news of giving shareholder the go ahead to vote on the merger.

Since October both stocks have essentially moved in unison, suggesting that the market already expects the merger to go ahead.

Perhaps investors are worried about whether SAR shareholder will accept the 0.3763 NST shares for each SAR share.

The SAR Board say the merger is still unanimously recommended and unanimously endorsed and supported by the NST Board.

There was also a big pullback in the spot gold price overnight after risk sentiment improved and demand for safe havens softened.

Which might also explain the share price action.

What’s next for the two mining giants?

Like I’ve said, the market has essentially called the merger.

The booklet detailing the specifics of the merger is expected to be sent to SAR shareholders next week, with the vote to happen early next year.

Should shareholders vote in favour of the merger and the court be satisfied, we could see a newly formed company trading from February 2021.

The big question is: Are NST shares worth a buy?

That all depends on your outlook for gold and what you’re looking for in a gold stock.

Should the merger go ahead, NST would become one of the largest gold miners in the world.

But that doesn’t necessarily mean it will be one of the most attractive.

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Lachlann Tierney

For The Rum Rebellion


Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 

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