Gold miner St Barbara Ltd (SBM.AX) agreed on Monday to buy smaller peer Genesis Minerals Ltd (GMD.AX) for A$541.3 million ($367.16 million), creating a mid-tier gold producer with a growing foothold in Western Australia’s Leonora gold district.
As part of the deal, St Barbara will divest its overseas assets into a new company, Phoenician Metals, which it intends to list on the Australian bourse. They include its Atlantic operations in Canada and Simberi gold mine in Papua New Guinea.
The combination will open a fresh source of feed for St Barbara’s processing mill, in the form of Genesis’ Ulysses deposit. It will also allow St Barbara to leverage Genesis Minerals’ balance sheet.
“Overall, the merger will either defer or eliminate ~A$400 million of capital expenditure, reducing near-term execution risk and funding requirements,” the companies said.
Genesis shareholders will receive 2.0338 new fully paid St Barbara ordinary shares for each share held, the two firms said in a joint statement.
The new company, called Hoover House, will target production of more than 300,000 ounces (koz) of gold per annum, compared with St Barbara’s standalone full-year 2023 guidance of 145-160 koz for Leonora.
St Barbara shareholders will own 38% of the combined entity, in addition to a direct 80% stake in spin-off Phoenician Metals.
Genesis will raise A$275 million to fund the merged entity and facilitate the transaction, the companies said.