St Barbara has been experiencing its fair share of trials and tribulations, which could mean the end of its merger with Genesis Minerals in its current form.
After St Barbara recently announced a statutory net loss after tax of $407 million in its half-year report to December 31, the company announced its Atlantic gold operations in Nova Scotia, Canada could be placed on care and maintenance.
St Barbara said the Nova Scotian environment and climate change minister had made requests for information regarding a proposal to deposit tailings into the Touquoy open pit at Atlantic.
In its December 2022 quarterly report, St Barbara indicated that it had lodged a final round of responses to questions from the Nova Scotia Government regarding environmental assessment into in-pit tailings deposition at Touquoy.
But with Nova Scotia asking for more clarity, it appears this approvals process will continue, and St Barbara will be required to cease production at the mine.
“In the company’s view, compilation of the information required to answer the minister’s questions would indeed take more time than is available before capacity of the existing tailings management facility is reached in early FY24 (2023–24 financial year),” St Barbara said in a statement.
“As a result, the company anticipates placing the operations into care and maintenance at that time.”
The creation of Hoover House would involve the demerger of Phoenician Metals, an ASX-listed entity that would represent St Barbara’s international assets – the Atlantic and Simberi operations – the latter of which St Barbara considered selling in 2022.
But St Barbara’s dealmaking capacity has been brought into question in the past, with its original acquisition of Atlantic Gold in 2019 – which gave it the Atlantic operations – considered “mind-bogglingly reckless” by a top-20 shareholder.
A hedge fund manager told the Australian Financial Review the latest chapter in St Barbara’s perceived mismanagement of Atlantic could spell danger for the Hoover House merger as it stands.
“Today’s ruling from the Nova Scotian minister for environment will be the final nail in the coffin of the St Barbara-Genesis merger in its current form,” he said.
“The material change event renders Phoenician’s demerger guidance redundant. We think this is a blessing for existing Genesis shareholders who were being walked into a forced marriage by a board and funding syndicate seemingly unwilling to admit the reality that the target’s equity value had rapidly eroded to near worthlessness in the time since the deal was launched.”
St Barbara’s share price has dropped 38 per cent in the last six months. The company was trading at $0.56 at close on Friday.