Raleigh Finlayson’s Genesis Minerals has raised $450m from investors to fund a deal to buy gold mining rival St Barbara.
Share trading in the company has been halted in both companies as problems with St Barbara’s Gwalia mine has forced a renegotiation of an earlier agreed nil-premium merger with Genesis Minerals.
Shares were sold to investors at $1.15 each in a deal handled through Canaccord and Euroz.
Shares in Genesis Minerals last traded at $1.10 per share, a 4.5 per cent premium to the last closing price.
In April, St Barbara slashed its output guidance for Gwalia, cutting expected output by as much as 25,000 ounces of gold, blaming the decision on a blasting mistake that slowed recovery of underground ore and on lower-than-expected gold levels from the underground mine.
Under the no-premium merger proposal reached between the two companies in December, St Barbara’s Simberi mine in Papua New Guinea and Atlantic would be spun out into a new ASX-listed entity known as Phoenician Metals, with 80 per cent of the stock sitting with St Barbara shareholders and the remainder owned by Genesis, to be renamed Hoover House after the merger.
Genesis had proposed a $275m raising to back the deal, with some of the cash destined to back the Phoenician Metals spin-out and the rest used to consolidate the joint company’s position in the rich Leonora gold district.
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