Genesis Minerals shares have risen sharply on the back of a revised deal to acquire St Barbara’s Leonora assets without taking on the miner’s Canadian and Papua New Guinea operations.
Genesis Minerals shares have risen sharply on the back of a revised deal to acquire St Barbara’s Leonora assets without taking on the miner’s Canadian and Papua New Guinea operations.
As foreshadowed by Business News last week, Raleigh Finlayson’s Genesis Minerals and St Barbara emerged from a two-week trading halt this morning to confirm the shape of a new merger.
Genesis will pay $370 million upfront in cash and $170 million in shares for St Barbara’s Leonora assets, notably the Gwalia goldmine and its processing plant, and $60 million worth of stock in contingent consideration.
The deal is worth about $600 million in total.
Genesis has raised about $450 million via a $1.15 per share capital raising to fund the purchase anchored by investment groups AustralianSuper and Resource Capital Funds.
Part of the initial deal struck last December had been to merge the two companies into a new entity, called Hoover House, while selling St Barbara’s Canadian and Papua New Guinea assets into a new ASX-listed company, Phoenician Metals.
That deal was ditched after St Barbara ran into a series of operational problems at both Gwalia and its Canadian operation.
“The St Barbara and Genesis boards have, by mutual agreement, terminated the scheme implementation deed between the parties in relation to the scheme and the demerger, predominately due to the material increase in funding requirements,” St Barbara told investors.
“The transaction will enable St Barbara to extinguish all senior debt and lease liabilities, and will hold a pro-forma cash balance of approximately $197 million.”
Genesis has been seeking to secure control of St Barbara’s Leonora assets, notably the Gwalia goldmine and its processing plant, so they can be integrated with its existing assets in the area, including the proposed high-grade Ulysses mine.
“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,” Genesis managing director Raleigh Finlayson said this morning.
“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.
“Shareholders will ultimately reap the long-term benefits of more production at lower cost and lower risk from this prolific mining district.”
Genesis Minerals shares responded positively to the news, lifting 8.9 per cent to trade at $1.19, while St Barbara shares dipped 5.5 per cent to 61 cents.
