The boards of St Barbara Ltd and its smaller peer Bardoc Gold Ltd have announced a $157 million buyout of Bardoc with St Barbara now set to acquire all the shares in Bardoc by way of a scheme of arrangement, at an almost 30 per cent premium to last Friday’s closing share price. Bardoc’s proposed Woodie Woodie manganese spinout would still proceed, according to the companies.
The boards of St Barbara Ltd and its smaller peer Bardoc Gold Ltd have announced a $157 million buyout of Bardoc with St Barbara set to acquire all the shares in Bardoc by way of a scheme of arrangement.
St Barbara said under the terms of the deal it would acquire Bardoc’s 3.1-million-ounce mineral resource estimates and 1 million ounce ore reserves. The company said there is also a significant land package including the highly prospective Bardoc Tectonic Zone. It also said the Zoroastrian and Aphrodite deposits were shovel ready and St Barbara’s acquisition would help accelerate its Leonora Province plan.
St Barbara Managing Director and CEO Craig Jetson said: “A key component of our Leonora Province Plan, which we launched in December 2020, was a review of opportunities in the region where we could deliver value.”
“Earlier this year we identified that the Bardoc ore bodies are in proximity to the Kalgoorlie-to-Leonora rail line and highway bringing them within economic haulage range of Leonora.”
In combination with our existing organic opportunities, including Tower Hill and Harbour Lights, this acquisition positions us to accelerate the delivery of a multi-decade province of satellite mines feeding an upgraded 2.1Mtpa capacity mill capable of alternating between free milling and refractory ore at Leonora.”
The Bardoc assets are located 180 kilometres south of Leonora adjacent to rail and road infrastructure and would enable economic haulage to the Leonora processing plant.
St Barbara said the acquisition coincides with a 50 per cent upgrade of its Tower Hill resource to 1.2 million ounces and said its significant resource position underpinned its plans to expand the Leonora processing plant from 1.4 million tonnes per annum to 2.1 million tonnes each year.
Jetson said St Barbara’s growth plan would be funded through operating cashflow and existing debt facilities.
Both parties also agreed Bardoc’s proposed Woodie Woodie manganese spinout would still proceed.
St Barbara will issue 0.36 of its shares for every Bardoc share, valuing Bardoc at $157 million and each Bardoc share at $0.53.
The companies said the implied valuation represented an almost 30 per cent premium to Bardoc’s closing price on Friday and a 34.7 per cent premium to Bardoc’s 30-day volume weighted average price.
The market has responded positively to the takeover news. On Friday, Bardoc closed at $0.41 however opened at $0.47 spiking to an intraday high of $0.49 before easing to trade between $0.47 and $0.48 on Monday afternoon.
The Bardoc board unanimously recommended shareholders approve the deal whereby they will end up with around 13 per cent of the enlarged St Barbara under the terms of the deal.
In September, Bardoc announced it had initiated a strategic review of the Project in light of a rapidly escalating cost environment in the WA resources sector, tightening labour market and other COVID-19 related challenges.
The companies said during the review process, St Barbara was identified as the logical owner of Bardoc, particularly given the rail and highway directly connect Bardoc’s key assets with St Barbara’s Leonora processing plant.
Bardoc underwent a 6:1 share consolidation earlier this month, resulting in around 290 million shares on issue.
Under the terms of the proposed deal, Bardoc shareholders will own 100 per cent of SpinCo its directors said was valued at $4.5m. Meetings are scheduled for March next year to ratify the deals.
St Barbara has appointed Macquarie Capital as its financial adviser with King & Wood Mallesons running its legals, while on the other side of the coin, Bardoc has retained Argonaut as its financial adviser and Steinepreis Paganin as legal advisor.
As part of the due diligence process St Barbara reviewed the feasibility studies Bardoc had completed on the construction of the Zoroastrian and Aphrodite underground mines. These studies will form the basis for St Barbara’s PFS over each mine with the key differences relating to material being transported approximately 180km by rail to the Leonora processing plant for production of gold doré, instead of a concentrate product produced on site, as proposed by Bardoc for the Aphrodite refractory ore.
St Barbara said it was aiming to commence work on the Zoroastrian underground mine in fourth quarter 2023 at an estimated capital cost of $15 million. It also plans to commence construction of the Aphrodite underground mine in first quarter 2024 at an estimated capital cost of $30 million.
After some lean years, management changes and setbacks with the development of its multi-orebody Bardoc gold project, Bardoc shareholders may be comforted they will now be part of the large and established St Barbara company that has the balance sheet strength to progress a number of its promising projects. A 30-odd per cent premium to last traded price is not a bad gift for Christmas either….
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