St Barbara production downgrade causes investor backlash

Image: St Barbara

St Barbara is allowing investors who applied for new shares to help fund the company’s proposed acquisition of Atlantic Gold to withdraw their applications by the end of the week.

The announcement follows market criticism about the timing of St Barbara’s $490 million equity raising for the acquisition, given the company revealed on Friday a production guidance downgrade at its Gwalia site.

Applicants are able to withdraw from their application for new shares by 5pm on June 7.

The Gwalia mine, which has a temporary blockage in its underground paste reticulation circuit, is facing a month delay in scheduled production in a particular stope, from June to July this year.

The company changed its Gwalia gold production for the 2019 financial year to be approximately 220,000 ounces, which is down from the previously anticipated 235,000-240,000 ounces.

The retail entitlement offer for the company’s takeover of Atlantic Gold closes today with new shares issued under the offer being allotted on June 12. The offer provided investors with an opportunity to subscribe to one new share for every 3.1 existing shares in the company held on May 17 (at the offer price of $2.89 per new share).

St Barbara today confirmed via a statement the successful completion of the institutional component of the underwritten entitlement offer secured the funding for its proposed acquisition of Atlantic Gold.

Results of the retail entitlement offer are set to be released on June 7.

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