One top broker has reportedly slashed its share price target for All Ordinaries Index (ASX: XAO) gold miner St Barbara Ltd (ASX: SBM) by more than 30%.
The downgrade came after a transformational takeover deal was reworked to become a $600 million sale earlier this week.
Right now, the St Barbara share price is 56.5 cents, 3.67% higher than its previous close.
For comparison, the All Ords is marginally lower at 7,556.1 points at the time of writing.
So, what's got one broker feeling bearish on the ASX All Ords gold stock? Let's start at the beginning.
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St Barbara's merger deal wiped from the table
St Barbara announced its plan to merge with peer Genesis Minerals Ltd (ASX: GMD) to create a new company, Hoover House, late last year.
Hoover House would take on St Barbara's cornerstone Leonora assets, with its remaining projects spun out.
However, that plan was scrapped following St Barbara's $407 million first-half loss, a downgrade to Leonora's full-year production guidance, and the scrapping of its all-in sustaining cost (AISC) outlook.
Instead, the pair decided Genesis will instead purchase the Leonora assets in a $600 million, part-scrip deal.
Leonora was responsible for more than half of St Barbara's gold production last half, producing 66,253 ounces of the group's 124,676-ounce production.
Ord Minnett slashes price target on ASX All Ords gold stock
That's left broker Ord Minnett disappointed, The Australian reports. Senior research analyst Paul Kaner was quoted, saying:
Unfortunately, SBM (and its shareholders) are left with few alternatives to this deal, given its strained balance sheet ($112m net debt at March 31), lower expected cash flows from Gwalia/Atlantic and the increase in the Environmental Performance bond at Atlantic (from C$41m to C$70m).
Kaner continued, saying the company will be "a different investment proposition" following the sale: "going from producer in a tier 1 jurisdiction to a developer in PNG and Nova Scotia".
The company will still hold its Atlantic operation, located in Nova Scotia, following the sale. The operation reached commercial production in 2018 while three nearby projects are being developed at Fifteen Mile Stream.
It will also walk away with its Simberi operation in Papua New Guinea where it's working on an upcoming sulphide project.
But the projects apparently don't impress Ord Minnett.
The broker has reportedly slashed its price target on St Barbara shares by 31% to 48 cents. That suggests the All Ords stock could fall 15%. It's also said to have dropped its rating on the stock to lighten.
