St Barbara and Bardoc Gold reveal $157m tie-up to unlock value of Leonora assets

Major gold miner St Barbara (ASX: SBM) has made a $157 million bid to acquire Bardoc Gold (ASX: BDC), in a move that both companies say will connect their key assets in Leonora.

Bardoc’s board has endorsed the bid which values it at $0.53 per share, and is a 29.9% premium to its last closing price of $0.41 on 17 December.

It was also a 34.7% premium to Barco’s 30-day volume weighted average price.

Under the deal, investors will receive 0.3604 new St Barbara shares for every Bardoc share held.

Once the acquisition has been completed, Bardoc shareholders will own 13% of St Barbara.

Strategic review

Bardoc appointed Neil Biddle as an interim executive director at the end of September to head up a strategic development review of the namesake Bardoc gold project in Western Australia’s goldfields.

As part of the review, Mr Biddle considered a number of pathways to unlock the project’s value including merger and acquisition opportunities.

Following the review, St Barbara was identified as the project’s “logical owner” – particularly with rail and road directly connecting it to St Barbara’s Leonora processing plant.

St Barbara plans to expand its Leonora plant’s capacity from 1.4 million tonnes per annum to 2.1Mtpa.

Ore from the Bardoc project’s primary Aphrodite and Zoroastrian deposits would provide near-term mill feed.

Bardoc gold project

The Bardoc project hosts 3.07 million ounces in global gold resources, with upside potential. It has current reserves of 1Moz.

Aphrodite is the key deposit with 1.663Moz in gold resources at 2 grams per tonne gold. Zoroastrian currently accounts for 530,000oz in resources, while Excelsior adds 354,000oz. There are other numerous other deposits across the project that also make up the remainder of the resource.

An exploration target of up to 336,000oz gold has been set for the multi-lode Zoroastrian deposit, where Bardoc has been actively drilling.

A recent optimisation study forecasts 150,000oz per annum of gold production by the third year of operation.

All-up, the Bardoc project comprises 40 tenements that span 447 square kilometres of ground about 180km south of Leonora by rail.

Positive outcome for all parties

Bardoc chairman Tony Leibowitz said the strategic review had “secured a very positive outcome” for shareholders, with an “an attractive transaction that delivers a substantial premium”.

“We undertook the review in light of the significant challenges confronting Bardoc as a junior developer aiming to bring a new project on stream in the face of cost pressures in the WA resource sector.”

“The transaction we have secured with St Barbara is an excellent outcome, which will deliver ownership of the Bardoc gold project to a much larger company with the balance sheet strength, resources and technical capability to bring the project into production through its Leonora gold operations,” Mr Leibowitz explained.

He added the transaction would also expose Bardoc shareholders to a much larger, diversified international gold producer with operating assets and a strong development pipeline in Australia, Papua New Guinea and Canada.

“We believe there is excellent potential for a future market re-rating and value uplift,” Mr Leibowitz said.

Meanwhile, St Barbara managing director and chief executive officer Craig Jetson pointed out the company had been focused on expanding its footprint within the Leonora province “to fill the mill” by growing its deposits through exploration and acquisition.

“Acquiring Bardoc unlocks access to extensive land packages near our Leonora operation.”

Mr Jetson also noted that the Bardoc project’s location near the rail line and highway brings the ore bodies within “economic haulage range” of St Barbara’s plant.

Manganese spin-out

As part of the deal, St Barbara plans to spin-out Bardoc’s South Woodie Woodie manganese assets.

Mr Leibowitz said the spin-out offers and “exciting opportunity” for Bardoc shareholders to receive shares via an in-specie distribution in a new battery metals-focused company.

“We will be providing further information on this exciting opportunity in the near-future,” he added.