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Genesis acquires Dacian Gold – is St Barbara next?

Genesis Dacian

Genesis Minerals has executed an off-market takeover of Dacian Gold in a deal worth $111 million, expanding its Leonora footprint in the process.

As part of the offer, Dacian shareholders will receive 0.0843 Genesis shares for each Dacian share they hold. Based on Genesis’ last closing price of $1.205 on July 1, the implied value of the offer is $0.102 per Dacian share.

This exchange ratio represents a 33 per cent premium from the five-day volume-weighted average price (VWAP) for Dacian ($0.082) and Genesis ($1.296) as of July 1.

Genesis said the Dacian acquisition would achieve appropriate regional consolidation by combining its organic growth and high-grade resources with Dacian’s large-scale strategic milling infrastructure at Mt Morgans in Western Australia.

The combined group will have approximately 4.5 million ounces of resources in the Leonora district, with a focus on growth through exploration and a pathway to production through the existing milling solution.

Dacian Gold suspended mining at Mt Morgans in June amid rising cost pressures. The company said it had experienced a 68 per cent increase in contractor load and haul rates (excluding fuel) since the end of the 2020–21 financial year, with a further 17 per cent increase forecast for the 2023 financial year.

Dacian said rising costs had been compounded by supply-chain challenges and approval delays.

Genesis said the enlarged company would have the financial capacity and operational experience to bring Mt Morgans and its Leonora gold project back into production in due course.

The gold miner acquired the Ulysses deposit (located within its Leonora project) in 2015 and completed two open-pit mining campaigns at the Ulysses west pit in 2016 and 2017.

Dacian directors are expected to unanimously recommend its shareholders accept the offer, in the absence of any superior proposal.

Genesis has also launched a $100 million capital raise to support the transaction, which it said has received firm commitments from the market including the likes of Australian Capital Equity and Northern Star Resources.

To complement the Dacian deal, St Barbara said it had recommenced discussions with Genesis regarding a potential consolidation of its Leonora assets.

St Barbara said its discussions were “independent” of the Dacian deal and reaffirmed that nothing was set in stone between the two companies.

Rumours have been swirling around potential merger-and-acquisition discussions between Genesis and St Barbara, with Genesis confirming as such in early June.

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