Genesis Minerals has revised its offer for the acquisition of St Barbara’s Leonora assets as Silver Lake Resources progresses its own bid for the operation.
Genesis’ new bid will see an extra 57.2 million shares be paid to St Barbara upon completion of the transaction.
This comprises 5 million new shares, while the 52.2 million shares that were meant to be paid when the Tower Hill project achieved first production, will now be paid upfront so long as St Barbara shareholders approve the transaction by June 30.
Genesis will still pay $370 million in cash to St Barbara. The gold explorer has also agreed to pay a cash deposit of $25 million.
It comes as Silver Lake Resources pushes hard for the Leonora assets, which includes the historic Gwalia gold mine.
Silver Lake’s initial offer included $326 million cash and a scrip consideration of 327.1 million Silver Lake shares, with these shares to be issued to St Barbara and its shareholders pursuant to a capital return.
But when St Barbara rejected the proposal, Silver Lake came again with a revised offer, addressing concerns around conditionality, timing and residual St Barbara liquidity.
St Barbara’s perception was that it would have significantly less cash to fund its obligations and capital requirements through Silver Lake’s bid compared to Genesis’ proposal.
So the revised Silver Lake bid enables St Barbara to retain 7.5 per cent or 94.8 million Silver Lake shares upon completion of the transaction, providing St Barbara with approximately $111 million in additional liquid assets. The balance of the Silver Lake scrip component would be distributed in-specie to St Barbara shareholders.
It is expected this would provide St Barbara with greater flexibility to fund its capital requirements following the completed transaction.
Despite Silver Lake’s revised offer, the St Barbara board has unanimously recommended the new Genesis proposal. And Genesis still believes it’s the right fit.
“The acquisition of St Barbara’s Leonora assets is consistent with Genesis’ established ‘open for business’ strategy,” Genesis said in a statement. “Genesis will be a leading ASX gold house exclusively focused on the prolific Leonora District in Western Australia, with production growth to a sustainable +300,000 ounces per annum.
“St Barbara and Genesis have worked together over 12 months to evaluate the significant unique synergies to be unlocked by combining St Barbara’s and Genesis’ neighbouring Leonora assets.”
Genesis highlighted the amenability of pairing its new Ulysses mine with the Gwalia mine, filling St Barbara’s underutilised Leonora mill and reducing costs as a result. The Leonora mill would also be complemented by Genesis’ new Admiral mine.
The Genesis deal would also see the Mt Morgans mill, which the company holds through its control of Dacian Gold, support St Barbara’s emerging Tower Hill project.
Genesis said its proposal is on track for completion by June 30.
Subscribe to Australian Resources & Investment and receive the latest news on commodity prices, resource developments, executive movements and more.