St Barbara, Genesis merge to create gold powerhouse

Genesis and St Barbara have announced that they will merge to create one of Australia’s leading gold houses, to be newly named Hoover House Ltd.

With a long-life, high quality asset base and substantial potential for organic growth, Hoover House will be headquartered in Perth with a new strategic plan and five-year outlook to be announced to the market in September quarter 2023.

The new company will have a production target of greater than 300 kilo pounces per annum, compared to St Barbara’s standalone FY23 production guidance of 145-160koz for Leonora in WA, with year-to-date actual production of 56koz.

The merger is expected to unlock substantial, near-term synergies for both sets of shareholders. The resetting of the combined entity’s corporate support model, a write-up of Genesis’ depreciable tax cost base, and deferment of capital in relation to the Gwalia mill in WA, is expected to result in synergies with a net present value of  about $200 million.

Overall, the merger will either defer or eliminate about $400m of capital expenditure, reducing near-term execution risk and funding requirements.

St Barbara will undertake a demerger of Atlantic, Simberi and other non-Leonora assets to St Barbara shareholders to form Phoenician Metals. Under the Scheme of Arrangement, it is expected that Hoover House will retain a 20 per cent shareholding in Phoenician Metals.

Raleigh Finlayson will be appointed managing director and chief executive officer of Hoover House and Tony Kiernan will be appointed as chair. The Board will comprise four directors from St Barbara, two directors from Genesis and one new Board member.

St Barbara chair Tim Netscher said the unique transaction would deliver significant value for all shareholders.

“The merger with our Leonora neighbour, Genesis, to create Hoover House, will accelerate our Leonora Province Plan,” he said.

“Shareholders will reap the benefits of more production at lower cost and lower risk from this prolific mining district.

“A significant component of the value delivered by the creation of Hoover House is the unique synergies delivered by the resultant combination of assets, such as the ability to sensibly stage the development of the various orebodies and to match one party’s ore to the other party’s mill capacity.”

Genesis managing director Raleigh Finlayson said the merger was a major step forward in the strategic journey Genesis embarked on less than 12 months ago.

“Sensible mergers and acquisitions is a key component of our multi-pronged growth strategy, and our team has a strong track record of executing accretive transactions. Consolidation of the world-class Leonora District is a natural fit for Genesis,” he said.

Each Genesis shareholder will receive 2.0338 St Barbara shares for each Genesis share held on the Scheme record date.

St Barbara shareholders will own 38 per cent of the combined entity, in addition to directly holding 80 per cent of Phoenician. The remaining 20 per cent of Phoenician will be held by Hoover House. Genesis shareholders will own 41 per cent of Hoover House and participants in the capital raising will own 22 per cent.

Editor of industrial titles and mastheads with Prime Creative Media. Publications include Rail Express and Australian Mining (web content).
Send this to a friend