St Barbara and Genesis to merge and form new Australian gold producer

It is intended that Hoover House will be headquartered in Perth, Western Australia, with a new strategic plan and five-year outlook to be announced to the market in 3Q23, post completion of the merger.

Hoover House will have a production target of more than 300 000 oz/yr, compared to St Barbara’s standalone FY23 production guidance of 145 000 – 160 000 oz for Leonora with year-to-date actual production of 56 000 oz.

The merger of St Barbara and Genesis is expected to unlock substantial, near-term synergies for both sets of shareholders. 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 AUS$200 million. Overall, the merger will either defer or eliminate approximately AUS$400 million of capital expenditure, reducing near-term execution risk and funding requirements.

St Barbara Chair, Tim Netscher, said:

“I am confident that this unique transaction will deliver significant value for all shareholders. 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.”

“In parallel, select assets including Atlantic and Simberi will be de-merged to create Phoenician Metals. This will provide an opportunity for shareholders to realise the long-term value of this well-endowed portfolio in a dedicated vehicle with a high-quality management team. Phoenician Metals will attract stronger investor attention and valuation in a stand-alone entity, while allowing Hoover House to focus 100% on the Leonora District.”

Genesis Managing Director, Raleigh Finlayson, said:

“This merger is a major step forward in the strategic journey Genesis embarked on less than 12 months ago. By combining with St Barbara, we are creating Hoover House, the premium Australian gold company we envisaged, with sustainable, high-quality production.”

“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”.

Read the article online at: https://www.globalminingreview.com/mining/13122022/st-barbara-and-genesis-to-merge-and-form-new-australian-gold-producer/