St Barbara chief executive officer Bob Vassie says Australian gold companies have so far managed to avoid a wider trend of consolidation due to the relative agility of the country’s sector.
Vassie, who made the comments in an address to the Melbourne Mining Club yesterday, referred to the mergers of Barrick and Randgold, as well as Newmont and Goldcorp, as two recent, high-profile international examples of consolidation.
He believes the deals were “triggered in part by shareholder frustration with modest long-term returns on one hand, and on the other with the promise of step change cost synergies”.
“In Australia, it’s a different picture. Our generally smaller companies managed the last gold price collapse and recovery with remarkable agility,” Vassie said.
He cited companies such as Evolution Mining, Northern Star Resources, Saracen Mineral Holdings and Regis Resources as examples of Australian companies that were contributing to the industry’s strength.
“The point here is that our recovery, the resulting cash flows and the continuation of strong performance – together with many of our Australian peers – has given the Australian gold industry a positive investment rating relative to many overseas gold miners,” Vassie said.
“This in turn is a measure of the quite dramatic recover in our sector beginning from my short time in gold from only five years ago.”
Vassie also addressed the planned $C722 million ($768 million) buyout of Nova Scotia-based Atlantic Gold that was announced earlier this month and is set to be finalised in July.
He said the acquisition would put St Barbara “on the ground in North America”, presenting new opportunities while preserving the company’s balance sheet as it continued to explore organic growth options. Vassie said the takeover “ticks all the boxes” for the gold miner’s strategy.
“Why did we elect to pursue inorganic growth at a time when global forces are impacting the industry as a whole? Because in its most simple terms, Atlantic ticks all the boxes on our published strategy,” Vassie said.
“It is our strong conviction that growth by acquisition must first and foremost be strategic. We are a patient company and diligent in our assessing our expansion opportunities.”
Atlantic Gold’s primary project, Moose River mine, has a forecast of 92,000–98,000 ounces of gold at an all-in sustaining cost (AISC) of C$695–755 an ounce for the 2019 calendar year.
Vassie said the company would not acquire “ounces for ounces’ sake” and that the company had opted not to pursue other inorganic growth opportunities that hadn’t been in line with the company’s strategy.
St Barbara also released a statement today to announce the downward revision of Gwalia’s projected guidance for the 2019 financial year.
The mine’s production for the period is now set at 220,000 ounces, down from the previous 235,000–240,000 ounce estimate, due to a one-month stope production delay caused by a temporary blockage in a paste reticulation circuit.
This delay has led to an overall downward revision of the company’s 2019 production guidance (including Simberi) to around 355,000 ounces from the previous 365,000–375,000-ounce estimate.