St Barbara expands into North America with Atlantic Gold acquisition

Image: St Barbara

St Barbara is targeting Canada for growth through a takeover of gold producer Atlantic Gold for C$722 million ($768 million).

Melbourne-based St Barbara intends to raise $490 million through an underwritten entitlement offer to partly fund the ‘friendly’ deal, which will be executed through subsidiary Nord Pacific.

St Barbara plans to fund the balance of the acquisition through existing cash reserves and it has also secured a $200 million three-year revolving loan facility with Westpac to support the combined company.

The company will acquire 100 per cent of all outstanding Atlantic shares at a cash offer price of C$2.90 per share.

The transaction excludes Atlantic’s 36 per cent interest in Velocity Minerals, which will be distributed to existing Atlantic shareholders following completion of the deal with St Barbara.

Atlantic, a TSX-listed low-cost gold producer, owns and operates the Moose River mines in Nova Scotia, Canada.

The site comprises one producing open pit, Touquoy gold mine, and three others that are in development, including Beaver Dam, Fifteen Mile Stream and Cochrane Hill.

Atlantic declared commercial production at Moose River in March 2018, producing 91,000 ounces at Touquoy during the year at an all in sustaining cost of $761 an ounce.

The company had planned to expand production at Moose River to over 200,000 ounces as the other three pits were developed.

St Barbara’s acquisition of Atlantic allows the company to diversify its portfolio at a low cost and high value operation, according to chief executive officer Bob Vassie.

“It is a sustainable long life operation of scale with a low AISC position which generates impressive margins, the asset also has significant growth potential which St Barbara identifies as an exciting opportunity,” he said.

Directors of Atlantic have backed the deal, deciding that the transaction is in the best interest of shareholders.

A special committee of independent directors unanimously approved the agreement and recommended its security holders vote in favour of the acquisition.

“St Barbara’s C$2.90 cash per share offer delivers an immediate and attractive premium to our shareholders,” Atlantic chairman and chief executive officer Steven Dean said.

“It not only recognises the value of our current plan for the Moose River mine, but rewards shareholders for the future growth and exploration potential that defines Moose River as a truly world class asset.”

Completion of the transaction is anticipated to occur in July 2019.

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