Australia-listed Horizon Minerals and Poseidon Nickel on Friday announced a merger, consolidating their complementary assets in the Western Australian Goldfields.

The proposed transaction will consolidate Horizon’s gold resources and Poseidon’s Black Swan processing infrastructure in the Kalgoorlie-Coolgardie districts.

Under the proposed transaction, the combined group will have a global mineral resource of about 1.8-million ounces of gold and 422 700 t of nickel, as well as 1 309 km² of attractive exploration tenure and two strategically located processing facilities in Black Swan and Lake Johnston.

The Black Swan processing plant has a 2.2-million-tonne-a-year nickel sulphide concentrator and associated infrastructure and is ideally located as a central processing hub for Horizon’s gold projects, as well as for regional toll treatment opportunities.

Horizon’s 465 000 oz Burbanks and 428 000 oz Boorara gold deposits form the cornerstone assets in a project pipeline aiming to deliver a five-year mine plan to fill the Black Swan processing plant.

The concentrator will also unlock value for Horizon’s high-grade Nimbus silver, zinc and gold project which contains 20.2-million ounces of silver, 78 000 oz gold and 104 000 t of zinc.

“This really is a logical consolidation of complementary assets, delivering a near-term and cost-effective processing pathway and creates greater potential for both sets of shareholders to create value from the cashflow generation potential of a long project pipeline and wholly owned processing infrastructure,” said MD Grant Haywood.

In terms of the transaction, each Poseidon shareholder will receive 0.1156 Horizon shares for every share held. The exchange ratio was based on a 40% premium to the 30-day volume weighted average price of A$0.0042 a Poseidon share for the period ended October 22.

Horizon shareholders will own 69.8% of the combined group, while Poseidon shareholders will own the remaining 30.2%.

“The schemes announced today are a pivotal step towards establishing a significant gold business and provide Poseidon shareholders and holders of Poseidon options with an exciting opportunity to become part of an emerging gold producer at a time when the gold price is at all-time highs,” said CEO Brendan Shalders.

Meanwhile, Horizon announced a A$14-million capital raise at A$0.045 a share.

Proceeds of the placement will be used to fund 50 000 m of extensional and resource definition drilling, mining studies and working capital, as well as a feasibility study for the Black Swan refurbishment and gold version.