Genesis cuts new St Barbara deal

Genesis Minerals is understood to have locked in a new deal to buy St Barbara’s Leonora assets for $600 million while removing risks tied to its earlier merger plan.

The Raleigh Finlayson-led company is believed to have locked-in a $450 million capital raising today to help fund the purchase.

Shares in Genesis and St Barbara have been suspended for nearly two weeks while they thrashed out a new deal.

Details of the new transaction are expected to be announced early next week.

Genesis has been seeking to secure control of St Barbara’s Leonora assets, notably the Gwalia gold mine and its processing plant, so they can be integrated with its existing assets in the area, including the proposed high-grade Ulysses mine.

Business News has confirmed Genesis will pay $540 million up-front for these assets, comprising $370 million in cash and $170 million in shares.

A further $60 million payment is conditional.

The capital raising was priced at $1.15 per share – a premium to $1.10, at which Genesis shares last traded.

It was anchored by investment groups AustralianSuper and Resource Capital Funds.

The joint lead managers were Euroz Hartleys and Canaccord Genuity.

That’s the same set of investors and brokers that backed a $275 million capital raising in December, priced at $1.20 per shares.

That deal did not complete as the associated merger was not executed.

The new deal indicates Genesis had the upper hand in negotiations after St Barbara ran into a series of operational problems at both Gwalia and its Canadian operation.

Under the previous deal, the two companies were to be merged in a nil-premium deal.

The Leonora assets would emerge in a renamed company, Hoover House, while St Barbara’s Papua New Guinea and Canadian assets would be sold into a new company, Phoenician Metals.

St Barbara’s poor operational performance and soft equity markets raised doubts about the appeal of Phoenician to investors.