St Barbara announces $768 million acquisition of Atlantic Gold Corporation

The St Barbara Ltd (ASX: SBM) share price won’t be going anywhere today after the gold producer requested a trading halt this morning.

Why are St Barbara’s shares in a trading halt?

St Barbara requested the trading halt whilst it undertakes an acquisition and an associated capital raising comprising an underwritten pro rata accelerated non-renounceable entitlement offer.

According to the release, St Barbara has entered into an agreement to acquire Canada based and TSX-listed low-cost gold producer Atlantic Gold Corporation for an all cash offer price of C$2.90 per share.

This implies a total equity value of C$722 million (A$768 million) and a total enterprise value of C$802 million (A$854 million).

What is Atlantic Gold Corporation?

Atlantic Gold Corporation is the owner and operator of Moose River Consolidated in Nova Scotia, Canada.

The release explains that Moose River comprises one producing open-pit and three others in development. It declared commercial production in March 2018 and produced 91,000 ounces of gold in calendar year 2018 from its Touquoy pit at an all-in sustaining cost (AISC) of C$731 an ounce (A$761 an ounce).

Once the other three pits are developed, its production is expected to expand to over 200,000 ounces per annum. Moose River has mineral resources of 2.4 Moz inclusive of mineral reserves of 1.9 Moz.

What now?

Atlantic Gold Corporation’s directors control 32% of the share register and have entered into a lock-up agreement to vote all shares they hold in favour of the transaction. A C$25 million termination fee is payable if a condition precedent is not satisfied due to an action by either party or if either party ceases to support the transaction.

St Barbara intends to raise approximately A$490 million through an underwritten pro-rata accelerated non-renounceable entitlement offer at A$2.89 per new share to partly fund the transaction. The balance will be funded via St Barbara’s existing cash reserves.

In addition to this, the company has secured a new committed A$200 million three-year revolving loan facility with Westpac Banking Corp (ASX: WBC) to support the combined company.

Management believes the transaction “demonstrates St Barbara’s disciplined approach to executing inorganic growth and the Company’s ability to deliver on its strategic plan.”

Fellow gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) have dropped lower today after the gold price gave back some of its recent gains overnight.

Not keen on St Barbara and the rest of the gold miners? Then check out this hot small cap stock that has been tipped for very big things.

One ASX Stock For An Estimated $US22 Billion Marijuana Market

A little-known ASX company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

And make no mistake – it is coming. To the tune of an estimated $US22 billion.

Cannabis legalisation is sweeping over North America, and full legalisation arrived in Canada in October 2018.

Here's the best part: we think there's one ASX stock that's uniquely positioned to profit immensely from this explosive new industry... taking savvy investors along for what could be one heck of a ride.

AND, this is the first time The Motley Fool Australia has EVER put a BUY recommendation on a marijuana stock.

Simply click below to learn more on how you can profit from the coming cannabis boom.

Click here to find out more


Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now