Australian-based gold producer and explorer St Barbara will acquire Atlantic Gold, a Canadian exploration and development gold mining company in an all-cash transaction for C$722 million.
St Barbara said it would raise approximately A$490 million to fund one portion of the bid, and the rest will be taken from its own cash reserves. Its C$2.90 per share cash offer represents a 39 percent premium to Atlantic Gold’s closing price. Analysts said that the deal has opened a new avenue of potential growth opportunities.
The deal is also being backed by the Atlantic board. This comes right after one of the world’s largest gold mining companies Newcrest Mining acquired a copper and gold mine in Canada in March.
Reuters said that Atlantic Gold Chairman and CEO Steven Dean will be invited to join St Barbara’s board and its operating team will remain. The deal is expected to close in July 2019.
“The high AUD gold price has benefited Aussie gold miners but they have also done very well operationally,” said UBS analyst Dan Morgan in Sydney. “In aggregate they have focused on cash flow which investors have liked.”
Atlantic Gold’s flagship project is the Moose River mine in Nova Scotia. It said that the offer might provide an attractive premium to shareholders. The company’s directors and officers who hold 32 percent of shares have also agreed to back the deal.
St Barbara Chief Executive Bob Vassie, said, “The addition of Moose River to the portfolio diversifies St Barbara’s production base with a low cost producing asset in a very favourable and prospective jurisdiction.”