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WA miners in $2.7b merger deal

An aerial view of the Sirius Resources' box cut which will provide access to develop the portal for the underground decline. Picture: Danella Bevis/The West Australian.

UPDATE 2.15pm: Independence Group has ended weeks of speculation by announcing this morning it would acquire Sirius Resources in a $1.8 billion friendly cash-and-scrip deal.

The deal would create a homegrown $2.7 billion WA base metals and gold giant.

The deal, which has the support of the target's board, will see Sirius spin off its non-core gold project Polar Bear and the company's Scandinavian assets into a stand-alone company called S2 Resources, to be run by Sirius managing director Mark Bennett.

Independence's deal, which has the support of Sirius' 35 per cent shareholder Mark Creasy, values the target st $1.8 billion, or $4.38 a share.

Independence Group has offered 0.66 of its own shares for each Sirius share on issue, plus 52c cash. Sirius shareholders will also receive about one new share in S2 Resources for every 2.5 of their Sirius shares they hold.

Sirius shareholders will also be entitled to receive Independence's final dividend later this year, provided the deal is approved and settled before September 30.

Sirius shareholders are expected to vote on the deal at a meeting in late August.

S2 will receive about $22 million upon its ASX listing.

WestBusiness flagged growing speculation about a merger earlier this month, only to spark a denial by Independence.

Sirius managing director Mark Bennett described the deal as a great outcome for Sirius shareholders.

“The board and management of Sirius have full confidence in the ability of (Independence managing director) Peter Bradford and the Independence team to drive the combined company’s projects forward and create significant value for shareholders,” he said.

“The combination of the Sirius development and IGO operational teams, together with their joint exploration experience, will be unrivalled.”

Mr Bennett said he was looking forward to replicating the success of Sirius at the new entity S2.

Independence managing director Peter Bradford said the transaction created a leading, diversified Australian mining company with an outstanding and rapidly growing production profile, a strong balance sheet, and excellent current and future cash flows.

“The acquisition of Sirius continues our stated strategy of building a diversified mining company with a balanced portfolio of exploration, development and producing assets, focusing on high-margin and long life,” he said.

“The proximity of the Sirius and Independence assets in WA creates opportunities to realise synergies and cost efficiencies across a dominant land-holding position.

“We are also delighted that Mark Bennett and Neil Warburton have agreed to join the Independence board and believe their skill sets will be of significant value to Independence going forward.”

Sirius shares rallied 66 cents, or 20.37 per cent, to close at $3.90 while Independence shares sunk 70 cents, or 11.97 per cent, to $5.15.