Genesis Minerals lands Dacian, targets St Barbara in big gold consolidation play
Project Roosevelt, tipped as a tie-up between Genesis Minerals, Dacian Gold and St Barbara, would deliver the combined company a dominant position in the WA’s Leonora district.
Genesis Minerals has confirmed it is considering an ambitious play to consolidate the rich gold ground around Leonora in WA, with the company renewing talks with St Barbara as it closes on a merger with near neighbour Dacian Gold.
Genesis’ immediate target is struggling miner Dacian Gold, but the size of the Raleigh Finlayson-led company’s broader ambition is apparent from the fact the company has returned to the negotiation table with St Barbara in a bid to add its Gwalia mine to its portfolio.
The play is understood to have been given the codename of Project Roosevelt, a reference to US President Franklin D Roosevelt - who followed one-time Gwalia mine manager Herbert Hoover into the Whitehouse in 1932.
A three-way tie-up would create a substantial regional player around Leonora, with a combined company likely to control two processing plants and multiple mining hubs with combined gold resources of close to 10 million ounces.
Genesis and Dacian both entered a trading halt on Monday, after agreeing to a scrip tie up valuing the struggling gold miner at about $110m. Under the terms agreed, Dacian shareholders will be offered 0.0843 Genesis shares for each Dacian share they hold, valuing the company’s scrip at 10.2c – a 10 per cent premium to the company’s last trading price.
It is understood Genesis has already secured 16.6 per cent of Dacian shares, with the bulk of that coming from a $12.6m Dacian placement to Genesis. Major Dacian shareholder Perennial Value Management is also believed to have agreed to support the Genesis bid.
At the same time Genesis has launched a $100m capital raising to top up its working capital as it considers its options for Dacian’s assets, mothballed earlier this month as a result of the skills crisis afflicting the WA resources sector.
Genesis on Monday was seeking to place 83 million shares at $1.205 – in line with its last trading price. Canaccord and Euroz Hartleys have been appointed joint lead managers to the placement.
St Barbara on Monday confirmed it had restarted talks with Genesis about a broader consolidation of the sector. The move, if successful, would add St Barbara’s 180.000 ounce Gwalia mine into the group, as well as the company’s extensive regional footprint.
St Barbara recently closed its acquisition of Bardoc Gold, adding 3 million ounces of mineral resources to its Leonora portfolio, including two near-term underground operations within 180km by rail of the Gwalia mill.
St Barbara has already outlined plans to expand the Gwalia mill to process gold from regional sources.
But any merger with Genesis would be contingent on the company’s ability to jettison its Simberi mine in PNG, and possibly also its Canadian operations, for which the company paid $850m in 2019 as neither are wanted by Genesis.
Genesis’ 2 million ounce Leonora gold project sits within 50km of St Barbara’s Gwalia operations, with Dacian’s 2 million ounce Mt Morgan hub about 100km away. Dacian also controls an additional deposit 100km north of Gwalia, its 600,000 ounce Redcliffe project.
Collecting the set would give Genesis a big regional footprint around Leonora, including two processing mills and substantial options to reorganise its mining options around multiple underground and open pit deposits.
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