St Barbara and Allied Gold have announced the two companies will merger to create a diversified gold miner.
According to St Barbara the combination of the two companies will created an international diversified gold miner and exploration company with a production of around 435 000 ounces by the end of the financial year 2013.
It would have three established mines and a fourth in a ramp up phase spread across Australia and the South West Pacific.
"Anticipated gold production growth from Allied Gold's assets include the Simberi Oxide expansion and potential development of the Simberi Sulphides project," St Barbara said.
Regarding the merger, St Barbara CEO Tim Lehany stated that "the strategic and financial logic of the combination is clear, driven by the complementary nature of the two companies and the strong organic growth profile of the combined business.
"It will deliver a diversified assets portfolio spanning exploration to gold production," he said.
Lehany added that cash flow from Gwalia will also support developments at Simberi.
"The transaction is anticipated to be immediately NAC accretive for our shareholders and earnings per share accretive from the first full year following completion of the transaction."
Allied Gold's chairman Mark Caruso added that his company fully supports the move.
"The investment attraction of the merged group is compelling, being one of the largest production and resource/reserve based mid-tier ASX listed gold companies.
"The combined group will have a declining cost profile and exciting growth potential through near term project development and exploration upside."
St Barbara will acquire all of Allied's share for $1.025 per share and .8 St Barbara shares for each Allied Gold share.
This offer values Allied at around $556 million.