A deal that originally suggested St Barbara would merge with Genesis Minerals now looks radically different.
Genesis is now set to purchase St Barbara’s Leonora gold assets for $600 million, including $370 million of upfront cash and $230 million through two share transactions, with St Barbara to hold onto its Simberi and Atlantic assets in Papua New Guinea and Canada, respectively.
This means the previously proposed ‘Phoenician Metals’ demerger is now redundant.
Genesis will fund the acquisition through a two-tranche, $470 million placement at a price of $1.15 per share, where $70 million will be raised through the company’s existing placement capacity, and $400 million will be raised conditional to shareholder approval.
The consolidation of St Barbara and Genesis’ adjacent gold assets in Leonora has always been the centrepiece of the deal, and amid St Barbara’s recent troubles at its Atlantic operations and the company’s recent desire to sell Simberi, these assets have been removed from the equation.
So St Barbara will truck on with Atlantic and Simberi while its shareholders gain a 19.5 per cent cut of Genesis. The deal will also enable the company to extinguish its senior debt liabilities of $160 million.
St Barbara said it would have a cash balance of approximately $197 million post-transaction.
“The board believes the transaction value from the sale of the Leonora assets represents fair value for our shareholders, who will now own a well-capitalised, debt-free business, with a portfolio that has significant potential, and the people and resources in place to realise its true potential,” St Barbara chair Tim Netscher said.
“Simberi and Atlantic have combined 5.9 million ounces (Moz) in mineral resources and 3.5Moz in ore reserves and provide a solid foundation for the business. The company has a clear strategy in place to maximise the value of those assets going forward.
“While St Barbara shareholders will receive a reduced percentage of the combined Leonora assets (in what was previously to be called Hoover House) relative to the scheme, this value is largely offset by the $110 million of additional cash, and 100 per cent shareholding in the residual St Barbara business.”
Genesis managing director Raleigh Finlayson said the transaction positions Genesis as a “gold industry leader”.
“Investors are demanding sensible regional consolidation, and this deal hits the spot, targeting long-life production growth to 300,000 ounces per annum exclusively from Leonora,” he said.
“We look forward to integrating the assets and unlocking the significant synergies available in Leonora. For example, Genesis’ nearby Ulysses mine will deliver unique value at Gwalia, providing Gwalia with a new lease of life by enabling a focused ‘margin over ounces’ business plan.”
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