MELBOURNE — Australian gold miner St Barbara stated on Wednesday it’ll purchase smaller Canadian peer Atlantic Gold Corp for $722 million (US$536 million), marking a second abroad acquisition for cashed-up Australian producers.
St Barbara’s $2.90 a share money supply represents a 39 per cent premium to Atlanta Gold’s closing worth on Tuesday in a deal that analysts stated opened up progress choices, however might result in a name on capital and crimp dividends.
“Shopping for an unknown asset in a brand new nation which itself probably requires a contemporary injection of capital… might current an extra barrier for some buyers,” stated RBC Capital in a report.
The bid, which has the backing of Atlantic’s board, comes after Australian gold miner Newcrest Mining Ltd purchased a copper and gold mine in Canada for US$806.5 million in March and stated it had the firepower for extra acquisitions.
Different mid-tier Australian miners, Evolution Mining and Northern Star Assets have additionally been touted by analysts as acquirers of miners abroad.
Australian greenback denominated gold is simply shy of January’s document of A$1,894 an oz. and up about 9 per cent from a yr in the past, whereas U.S. greenback gold is nearly flat.
“The excessive AUD gold worth has benefited Aussie gold miners however they’ve additionally accomplished very nicely operationally,” stated UBS analyst Dan Morgan in Sydney.
“In mixture they’ve targeted on cashflow which buyers have appreciated,” he stated.
Atlantic Gold, whose flagship mission is the Moose River mine in Nova Scotia, stated the supply delivered a sexy premium to shareholders. Administrators and officers of Atlantic who management 32 p.c of shares had agreed to again the bid.
St Barbara stated it will increase about A$490 million (US$340 million) to partially fund the bid, with the rest coming from its personal money reserves.
“The addition of Moose River to the portfolio diversifies St Barbara’s manufacturing base with a low price producing asset in a really beneficial and potential jurisdiction,” St Barbara Chief Govt Bob Vassie stated.
Atlantic Gold Chairman and CEO Steven Dean could be invited to affix St Barbara’s board and the corporate’s working group could be retained. St Barbara anticipated to shut the deal in July.
The newest purchase comes amid a shakeup within the gold sector. Barrick Gold and Newmont Mining have stated they’ll give attention to the best-performing mines following their respective acquisitions of Randgold Assets and Goldcorp. This has prompted expectations of mine gross sales all over the world over the following few years.
© Thomson Reuters 2019