St Barbara looking to a golden future with Bardoc bid
St Barbara chief executive Craig Jetson has doubled down on his bet that the company’s 100-year-old operations near Leonora in WA are the key to the company’s future.
St Barbara chief executive Craig Jetson has doubled down on his bet that the company’s 100-year-old operations near Leonora in Western Australia are the key to the company’s future, lobbing a $157m all-scrip offer for distant neighbour Bardoc Gold.
Bardoc put itself on the market in September, after concluding that rising costs in WA’s superheated resources sector would not support the construction of a mill for its Zoroastrian and Aphrodite underground projects, launching a strategic review and seeking a buyer for its assets.
While those assets are about 180km away from the mill at St Barbara’s Gwalia mine, near Leonora in WA’s northern goldfields, Mr Jetson told The Australian that St Barbara was a “logical” owner for Bardoc’s mines, given the proximity of both Bardoc’s deposits and Gwalia’s mill to an underused railway line servicing the region.
Under the friendly tie-up with Bardoc, St Barbara will issue 0.36 of its own shares for each Bardoc share in the market, with holders of the junior gold company to emerge with 13 per cent of the combined entity.
The offer values Bardoc at 53c a share, based on St Barbara’s $1.47 closing price on Friday, or a 35 per cent premium on its average trading price for the previous 30 days.
Gwalia is St Barbara’s flagship gold mine and has been operating since 1896, in various forms. But while the mine still delivers high grade ore, the underground operation is now one of the deepest in Australia and has struggled to fill the company’s 1.1 million tonne a year mill in recent years, undermining it.
But, while the use of the railway line will help fill the Gwalia mill when the company brings Bardoc’s Zoroastrian deposit into its production plan in mid-2025, Mr Jetson says the key to future growth will be an expansion of the Gwalia mill to treat refractory ore – a more complex material that has posed a major stumbling block for more than a few WA gold miners in the past.
To treat the refractory ore, Mr Jetson says St Barbara will license a Glencore-developed processing technology – little used in Australia, but used successfully overseas including at operations overseen by Mr Jetson when an executive at zinc miner Nyrstar.
The processing method will allow St Barbara to expand the Gwalia mill and potentially acquire other regional deposits.
“It’s reasonably simple, technically simple, and 70 per cent of the equipment that I need to be able to process that orebody is already there,” Mr Jetson said.
St Barbara shares closed down 8.5c to $1.385 on Monday, with Bardoc shares up 6c, or 14.6 per cent, to 47c.