Genesis Minerals has reached a revised deal with gold producer St Barbara to purchase the latter’s Leonora assets in Western Australia for nearly A$600m ($403m).
The deal involves the divestment of St Barbara’s Leonora assets including the Gwalia mine, as well as nearby exploration and development assets.
According to the new binding agreement, Genesis will have to pay A$370m in upfront cash and issue 147.8 million of its shares worth A$170m.
It will also issue another 52.2 million shares worth A$60m upon the Tower Hill project reaching first production.
The company will retain its Simberi operations in Papua New Guinea and Atlantic assets in Canada.
This flips the original agreement signed in December 2022, under which St Barbara was due to acquire Genesis in a A$541.3m deal.
The original agreement had called for the merger of the companies’ gold assets in Leonora to create Hoover House.
It also required the demerger of St Barbara’s non-Leonora assets and the bundling of these assets into a new company named Phoenician Metals.
The previous deal was scrapped due to increasing funding needs, driven partly by underperformance at the Gwalia mine in Leonora.
The new deal is pending shareholder and regulatory clearances, with completion anticipated by 30 June 2023.
St Barbara shareholders will own up to 19.5% of Genesis under this contract.
According to the Australian miner, the revised deal will also enable it to ‘extinguish’ its senior debt and lease liabilities.
The company said it would hold a cash balance of around $197m following the transaction.
St Barbara chair Tim Netscher said: “While St Barbara shareholders will receive a reduced percentage of the combined Leonora assets (in what was previously to be called Hoover House) relative to the scheme, this value is largely offset by the $110m of additional cash and 100% shareholding in the residual St Barbara business.”
Genesis will finance the deal’s cash element via a $470m two-tranche placement at $1.15 a share.
The St Barbara board has unanimously recommended the deal to shareholders, provided no superior offer is made.
Genesis managing director Raleigh Finlayson said: “The acquisition of St Barbara’s Leonora assets will position Genesis as a gold industry leader with a dominant position in Western Australia’s world-class Leonora District. Investors are demanding sensible regional consolidation, and this deal hits the spot, targeting long-life production growth to 300,000oz per annum exclusively from Leonora.”