Gold miner St Barbara Ltd (ASX: SBM) has announced two deals worth $470 million under which it will sell down interests in its Simberi gold operations in Papua New Guinea.
The company has also announced a positive feasibility study for expansion of the Simberi mine, which would add another 13 years to its mine life.
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Two major deals announced
Late on Wednesday, St Barbara said it had struck an agreement with Chinese company Lingbao Gold Group (HKG: 3330), which would pay $370 million for a half stake in a St Barbara subsidiary, which in turn would own 80% of the Simberi gold project.
St Barbara separately announced a deal to sell 20% of Simberi to another company, Kumul Mineral Holdings, for $100 million.
St Barbara said the transactions would mean it was fully funded for its share of the expected capital costs of the Simberi expansion project, "thereby significantly derisking the Simberi Expansion Project and accelerating the timeline to final investment decision and expanded production''.
Deal a boon for shareholders
The company said in a statement to the ASX that the deal valued the Simberi project at more than St Barbara's current market valuation.
The transaction values 100% of the Simberi Gold Project at $800 million which represents a 31% premium to the current St Barbara market capitalisation. The transaction represents a materially higher premium to the current look through value of Simberi within St Barbara, with St Barbara's market capitalisation also reflecting its 100% ownership of the development projects in Nova Scotia and substantial cash, bullion, gold sales receivables and investments.
St Barbara said Lingbao was a major Chinese gold producer, which was listed on the Hong Kong Stock Exchange, with a valuation of about US$2.8 billion.
St Barbara Managing Director Andrew Strelein said the two deals announced on Wednesday would help fast-track the Simberi expansion.
The investments by Lingbao and Kumul in Simberi will help us accelerate the development of the Simberi Expansion Project and the delivery of its value to our shareholders and key stakeholders in PNG." "This is a high-quality brownfields project with low capital intensity, a highly competitive operating cost structure and long-life resource that has potential to grow in the future. With Lingbao we have a committed, experienced and a well-funded partner. In addition, we welcome Kumul to the project as a co-investor.
St Barbara also announced on Wednesday that the feasibility study into the Simberi expansion indicated it would produce 2.1 million ounces of gold over 13 years out to 2039.
The initial project capital was estimated at US$275 million, with pre-expansion growth capital of a further US$50 million to US$70 million across FY26 and FY27.
Mr Strelein said the project was developing into a "highly compelling opportunity to create real value for St Barbara shareholders''.
The expansion project would double the rate of mining from the current rate of 10 million tonnes of ore per year.
