Genesis bags St Barbara operations while fund managers plunge into Australian gold stocks
The battle for control of the $600 million worth of Leonora gold assets struggling miner St Barbara (ASX: SBM) seems to be over with Genesis Minerals (ASX: GMD) upping its offer and the other contender, Silver Lake Resources (ASX: SLR) having the door slammed in its face.
But away from that corporate battle, investors will be impressed that fund managers are now embracing the gold miner market, with world giant Blackrock moving to 5.01% of Silver Lake while Sydney based Tribeca Investment Partners now holds 5.58% of Genesis — developments that will reassure the gold bugs.
More shares if Tower Hill developed
Genesis has sweetened its offer for St Barbara and now proposes to pay $370 million in cash, $170 million of new shares and, if the Tower Hill project proceeds, a further $60 million in stock.
The Tower Hill deposit lies 2km north of St Barbara’ historic Gwalia mine and is to be developed as an open pit, holding a resource of 20 million tonnes at 1.8 grams per tonne gold for 1.2 million ounces and a reserve of 9.7Mt at 1.8g/t for 600,000oz.
All up, Genesis is outlaying $631 million based on the Genesis closing share price.
The deal covers the Gwalia underground mine (which in 1898 appointed Herbert Hoover, the future US president, as general manager), the Ulysses Underground now in development and, apart from Tower, other pre-development projects: the Redciffe open pit, Jupiter open pit and Leonora open pit.
St Barbara shareholders will now own 19.9% of Genesis.
Silver Lake’s offer rebuffed
St Barbara has dismissed the non-binding, indicative and conditional proposal from Silver Lake, which included payment of $326 million in cash and $332 million worth of new shares.
St Barbara said Silver Lake’s offer is subject to “significant uncertainty” given it is not fully funded.
“In St Barbara’s view, Silver Lake has not provided any reasonable or quantitative assumptions to support its proposed consideration which could otherwise be confirmed via due diligence,” the company noted.