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St Barbara to acquire Atlantic Gold
Posted on Wednesday, 15 May 2019 10:57
St Barbara, an Australian gold miner, has agreed to acquire Canadian peer Atlantic Gold for CAD 802.00 million (USD 595.49 million) as part of its strategy to diversify production base with a low-cost and long life mine in a favourable jurisdiction.
The Melbourne-based acquiror is offering CAD 2.90 per share in the target, representing a premium of 38.8 per cent to its close of CAD 2.09 on 13th May, the last trading day prior to the announcement.
St Barbara will have access to the Moose River gold mining location in Nova Scotia, Canada as part of the acquisition.
The mine comprises one producing open-pit and three others currently in development, declaring commercial production in March 2018 and producing 91,000 ounces in calendar 2018.
Moose River has mineral resources of 2.40 million ounces inclusive of mineral reserves of 1.90 million ounces and is expecting the new locations to expand production to over 200,000 ounces following completion.
The transaction does not include Atlantic Gold’s 36.0 per cent interest in Velocity Minerals, which will be spun out to existing shareholders after closing of the acquisition.
In addition, St Barbara has agreed to raise AUD 490.00 million (USD 340.36 million) through an underwritten pro-rata accelerated non-renounceable entitlement offer to partly finance the deal.
The balance will be funded using existing cash reserves.
St Barbara has also secured AUD 200.00 million in a new committed three-year revolving loan facility with Westpac Banking to support the combined business.
Closing is slated for July 2019.
Shares in St Barbara closed up slightly to AUD 3.32 following the announcement yesterday, valuing the business at AUD 1.75 billion.
Reuters also picked up on the deal and cited Dan Morgan, a UBS analyst in Sydney, as saying the Australian gold price is high and has benefitted miners in the country.
This has resulted in a number of firms looking overseas to expand, including Newcrest Mining, which agreed to acquire Imperial Metal’s copper and gold mine in Canada in March for USD 806.50 million.
Atlantic Gold recorded gold production of 19,612 ounces in the first quarter ended 31st March 2019.
Net income totalled CAD 5.30 million, on adjusted earnings before interest, taxes, depreciation and amortisation of CAD 15.70 million and mine operating earnings of CAD 9.70 million during the same timeframe.
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