St Barbara Set To Acquire Atlantic Gold At An Enterprise Value Of A$854 Mn

St Barbara Set To Acquire Atlantic Gold At An Enterprise Value Of A$854 Mn

St Barbara Limited (ASX: SBM), an Australian Stock Exchange listed gold miner and explorer, announced on 15th May 2019, that the company entered into a Canadian Plan of Arrangement Agreement with Atlantic Gold Corporation through its wholly-owned subsidiary Nord Pacific Ltd.

The Atlantic Gold Corporation, a low-cost gold producer, owns and operates Moose River, which consists of Touquoy (a gold producing open pit) and Beaver Dam, Fifteen Mile Stream and Cochrane Hill (development prospects).

Moose River, which declared the commercial production in March 2018, produced 91 kilo ounces of gold in the calendar year 2018 (CY2018) from the gold producing open pit- Touquoy, with an all-in-sustaining-cost (AISC) of C$731 an ounce.

The company mentioned that as the other pits are developed, the operations are now planned to produce more than 200 kilo ounces of gold. Moose river hosts 2.4 million ounces of mineral resources inclusive mineral reserves of 1.9 million ounces.

Also, SBM released its Q3 March FY19 report.

St Barbara mentioned that the company would acquire 100% of all the outstanding shares of the Atlantic Gold Corporation on a fully diluted basis, at an all-cash offer of C$2.90 a share of Atlantic, which in turn, marks a total equity value of A$768 million (C$722 million). The total enterprise value stands at A$854 million (C$802 million). However, the proposed transaction excludes the Atlantic’s 36% interest in Velocity Minerals Ltd.

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 Source: Company’s Report, Transformational Acquisition

The proposed acquisition by the company signifies an attractive acquisition cost per ounce reserves of A$455 per ounce or C$428 per ounce.

Atlantic’s Directors hold 32% of the register, and as per the agreement entered into a lock-up agreement to vote all shares controlled by them in favour of the proposal

A termination fee of C$25 million will apply to either party, if the requirement of the agreement is not met amid actions by either party or if either party ceases to support the transaction.

St Barbara intends to fund the proposed transaction partially through its existing cash reserves and a three-year revolving loan facility of A$200 million secured by the company with Westpac Banking Corporation. SBM further intends to raise A$490 million by an underwritten pro-rata fast-tracked offer related to non-renounceable entitlement.

Source: Company’s Report, Transaction Summary

The company plans to offer a subscription of 1 new fully paid ordinary share in St Barbara to the eligible shareholders at an offer price of A$2.89 per new share, for every 3.1 existing fully paid ordinary shares held by the shareholders as at 7:00 pm AEST on the record date of 17th May 2019.

The new offering represents a 13.0% discount to the closing price of A$3.32 on 14th May 2019, and a 10.1% discount to the theoretical ex-rights price of A$3.22 on 14th May 2019, which in turn, will mark an issue of approx. 169.7 million new shares.

The issue includes an Institutional Entitlement Offer, which started today and will remain in place till 16th May 2019.

The issue will also mark a Retail Entitlement Offer from 21st May 2019 till 4th June 2019 (5.00pm AEST), and eligible retail investors can take participate at the same offer and offer ratio under the Institutional Entitlement Offer.

Any shortfall arriving out of non-subscription by the eligible institutional would be offered to eligible institutional investors who apply for new shares in excess of their entitlement.

The list of events and their date are as follows:

 Events (Source: Company’s Report)

The shares of the company last traded on 14th May 2019 and closed at a price of A$3.320.


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