The deal will result in the creation of a mid-tier gold producer, named Hoover House, which will exclusively focus on the Leonora District in Western Australia.
Under the agreement, shareholders of Genesis Minerals will receive 2.0338 new fully paid St Barbara ordinary shares for each share held in the company.
Genesis Minerals looks to raise A$275m, at A$1.20 a share, to fund the combined business and support the transaction.
St Barbara will also demerge its Atlantic gold operations in Canada, the Simberi gold mine in Papua New Guinea, and other non-Leonora assets to St Barbara shareholders to form Phoenician Metals.
The newly demerged entity, called Phoenician Metals, will be listed on the Australian Securities Exchange.
Following scheme implementation, St Barbara shareholders will hold a 38% stake in Hoover House and Genesis Minerals’ shareholders will have a 41% stake. The remaining 22% stake will represent shares issued for the capital raise.
St Barbara’s shareholders will own an 80% stake in spin-off Phoenician Metals while Hoover House will hold a 20% interest.
In a press statement, the two firms said: “The resetting of the combined entity’s corporate support model, a write-up of Genesis’ depreciable tax cost base, and deferment of capital in relation to the Gwalia mill is expected to result in synergies with a net present value of approximately A$200m.
“Overall, the merger will either defer or eliminate ~A$400m of capital expenditure, reducing near-term execution risk and funding requirements.”
Hoover House aims to have production of more than 300,000oz of gold per annum.
St Barbara chair Tim Netscher said: “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.”
Subject to certain conditions such as approval from shareholders of both firms and others, this scheme of arrangement is planned for implementation by May 2023.
The Genesis board unanimously recommends the scheme in the absence of a superior offer and subject to an independent expert conceding that the proposal is in the shareholders’ best interests.