ASX-listed Kula Gold has received a conditional scrip takeover bid from fellow Western Australian explorer Forrestania Resources, offering one Forrestania share for every 5.6 Kula Gold shares.

The proposed exchange values Kula at a 41% premium to its ten-day volume-weighted average price through October 10.

Kula directors regard the bid as a compelling route for shareholders to “realise benefit from the 80% owned Mt Palmer gold project sooner than if the company sought to develop the project itself".

The board has unanimously recommended acceptance of Forrestania’s offer, in the absence of a superior proposal, and the directors themselves intend to accept for their holdings.

Kula and Forrestania have executed a bid implementation agreement (BIA). Under the BIA, Kula is restricted from soliciting competing offers during the bid period. Forrestania is also obligated, subject to option terms, to extend the offer to the exercise of existing Kula options and to provide consideration in Forrestania shares for any outstanding options. 

The transaction would consolidate Forrestania’s regional footprint, adding Kula’s Mt Palmer and adjacent Southern Cross gold assets to its portfolio, delivering further scale and strategic alignment in the Southern Cross goldfields region.

“This transaction marks a natural progression in bringing together two complementary exploration portfolios within one of Western Australia’s most prolific gold belts. It expands Forrestania’s regional presence and strengthens our position as a focused gold growth company with genuine scale and a clear pathway to growth," said Forrestania Resources chairperson David Geraghty.

"With gold prices remaining strong and investor interest building, this transaction underscores Forrestania’s capacity to execute strategic, value-accretive opportunities with speed, discipline and purpose," he added.

Kula Gold chairperson Mark Stowell commented that the consolidation of Kula and Forrestania's gold assets advanced the ambitions of both companies to become gold producers and would provide economies of scale.

"In the absence of a superior offer, our directors are confident that this regional consolidation strategy will provide an optimal outcome for Kula Gold."