St Barbara has proposed a merger with fellow gold miner Catalpa Resources.
It approached Catalpa to form what it calls a “leading Australian mid-tier gold mining company”.
The proposal is composed of a scrip offer of $1.92 per Catalpa share as well as $.96 in cash per share.
According to St Barbara, the merged entity would have an out put of around 480 000 ounces in FY 12 with 3.9 million ounces of gold reserves and 9.8 million ounces of gold resources, and would fund further underground development at Catalpa’s Edna May mine.
Despite St Barbara’s belief that the merger would create a miner with the largest gold reserves in the mid-tier sector, Catalpa has told its shareholders to take no action on the offer.
Catalpa stated that the gold miner has made the unsolicited offer due to an undervalued Catalpa share price.
It noted that the offer was highly conditional.
Catalpa stated that it will hold further discussions with St Barbara and its advisers in the coming weeks.
At the time of publication, Catalpa has a market cap of approximately $300 million.
Mining merger and acquisition activity is predicted to rise sharply in Australia in the coming months as the mining boom and growth in commidity prices reinvigorates investment interest in the sector.