St Barbara shareholders tick off on Gwalia sale
Raleigh Finlayson’s Genesis Minerals has finally gotten its company-making deal to consolidate the Leonora gold district over the line.
Raleigh Finlayson’s Genesis Minerals has finally gotten its company-making deal to consolidate the Leonora gold district over the line, with St Barbara shareholders voting in favour of selling its Gwalia mine on Tuesday.
While there was a significant shareholder backlash against the sale, following Silver Lake Resources’ intervention in the process, almost 78 per cent of St Barbara shareholders voted in favour of the deal at a meeting in Perth on Tuesday.
About 56 per cent of the company’s shares were voted, with 77.7 per cent cast in favour of selling St Barbara’s Leonora assets – including the historic Gwalia mine – voting in favour of the deal.
There was no such resistance from Genesis shareholders, with more than 99 per cent voting in favour of share issues to back up the acquisition.
Under the deal Genesis will pay $370m cash and 200 million shares for Gwalia, taking a major step towards consolidating the rich gold district around Leonora in WA.
St Barbara chair Kerry Gleeson said the company’s board was pleased with the level of support shown by the company’s shareholders.
“The St Barbara board has been through a very detailed process to evaluate the best strategic options for the Company, and while this has taken some time, we are grateful for everyone’s patience in getting us to this point,” she said.
The shareholder votes leave Genesis clear to add St Barbara’s Gwalia mine and processing plant to its own undeveloped gold projects in the region, and strengthen the company’s case for a return tilt at mopping up control of Dacian Gold.
Under the plan Genesis will emerge with a resource base controlling 3.1 million ounces of gold in its economic reserves, and more than 15 million ounces in its broader resources.
Adding ore mined at its own undeveloped deposits to the Gwalia underground operation, Genesis argues it can fill the Gwalia mill more easily and eventually build to become a 300,000 ounce a year gold producer.
The future is less certain for St Barbara. While the deal will help stave off almost certain insolvency by allowing the company to repay its bank debts, and leave the company with almost $200m in cash.
But Gwalia has been the company’s flagship asset for the last decade. Its Canadian operations have been mothballed as the company fights for regulator approval to open new mining areas and salvage something from the wreckage of the company’s $780m takeover of Atlantic Gold in 2019.
And, while its Simberi operations in PNG still include 2 million ounces of gold in its mining reserves, the mine has suffered regular outages over the years and extending the life beyond 2026 will likely include an expensive investment in an expansion to allow the company to treat the refractory ore that makes up the bulk of the remaining deposit.
St Barbara shares closed down 1c to 52.5c, with Genesis down 2.5c to $1.345.