Westgold Resources and Karora Resources agreed to merge to form a diversified gold company focused on Western Australia.

The transaction, expected to be completed by late July pending approvals, will create a company with +400kozpa gold production capacity.

Karora shareholders will receive 2.524 Westgold shares, 68 cents cash, and 0.30 SpinCo shares per Karora share, valuing each Karora share at approximately $6.60.

The merger is projected to yield operational and capital expenditure synergies of around $490 million.

Post-merger, Westgold and Karora shareholders will own 50.1% and 49.9% of the new company, respectively, with an estimated market capitalisation of $2.2 billion.