St Barbara has agreed to acquire rival Australian miner Genesis Minerals for A$541.3m ($367.1m) to create Hoover House, which will exclusively focus on the Leonora District in Western Australia.
The acquisition will be executed through a scheme of arrangement. As per the terms, shareholders of Genesis Minerals will exchange each of their shares in the company for 2.0338 shares of St Barbara.
In conjunction with the scheme of arrangement, St Barbara has agreed to demerge its Atlantic gold operations in Canada, the Simberi gold mine in Papua New Guinea, and other assets in Australia to its shareholders.
The demerged assets will be bundled into a new company called Phoenician Metals, which is intended to be listed on the Australian Securities Exchange (ASX).
As per the share exchange ratio, St Barbara’s shareholders will have a 38% stake in Hoover House, Genesis Minerals’ shareholders will have a 41% stake, while the remaining 22% stake will represent shares issued for the capital raise.
In Phoenician Metals, St Barbara’s shareholders will hold an 80% stake, while Hoover House will have a 20% stake.
Genesis Minerals managing director Raleigh Finlayson said: “Sensible M&A is a key component of our multi-pronged growth strategy, and our team has a strong track record of executing accretive transactions. Consolidation of the world-class Leonora District is a natural fit for Genesis.”
“The close proximity of the combined company’s core Leonora assets, the ability to unlock substantial synergies and the clear path to a market re-rate makes this the right deal for both Genesis and St Barbara shareholders.”
Hoover House will target production of more than 300,000 oz of gold per annum, compared to St Barbara’s standalone FY23 production guidance of 145,000-160,000oz for Leonora with year-to-date actual production of 56,000oz.
St Barbara chair Tim Netscher said: “The merger with our Leonora neighbour, Genesis, to create Hoover House, will accelerate our Leonora Province Plan. Shareholders will reap the benefits of more production at lower cost and lower risk from this prolific mining district.
“A significant component of the value delivered by the creation of Hoover House is the unique synergies delivered by the resultant combination of assets, such as the ability to sensibly stage the development of the various orebodies and to match one party’s ore to the other party’s mill capacity.”
Genesis Minerals plans to raise an amount of A$275m ($187m) to fund Hoover House and facilitate the transaction, subject to the scheme of arrangement and demerger becoming effective. The funding is expected to come from AustralianSuper, Resource Capital Funds VII, and other institutional investors.
The implementation of the scheme of arrangement, which is subject to certain conditions such as approval from shareholders of both firms and others, is anticipated to be completed by May 2023.
