Australian gold producer St Barbara Ltd. agreed to pay $722 million to acquire Atlantic Gold Corp., adding a mine in Canada as the sector’s wave of consolidation continues.
St Barbara offered $2.90 a share for Vancouver-based Atlantic Gold, about a 40-per-cent premium to Tuesday’s close, and will fund the deal from cash reserves and by raising about AUS$490 million in a share sale to existing holders, according to a statement Wednesday. Atlantic said its board has unanimously approved the deal.
The global gold sector is being reshaped by a bout of deal-making led by Barrick Gold Corp.’s $5.4 billion acquisition of Randgold Resources Ltd. and a second major merger that created Newmont Goldcorp Corp.
Atlantic, which operates the Moose River operation in Nova Scotia, forecasts production this year of as much as 98,000 ounces of gold, with expansion plans to more than double that rate, according to filings.
“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,” St Barbara Chief Executive Officer Bob Vassie said. “The asset also has significant growth potential.”
Australian producers, which have outperformed global peers, have been urged by investors to review opportunities to add competitors in North America. Vassie flagged last year that Melbourne-based St Barbara would hunt for deals in the U.S. and Canada to expand its portfolio and reduce reliance on its existing assets in Australia and Papua New Guinea.
St Barbara, which is being advised by Deutsche Bank AG, Ashurst LLP and Fasken Martineau DuMoulin LLP, expects the deal to be completed in July. The producer separately has agreed a new AUS$200-million, three-year loan facility with Westpac Banking Corp.
Canaccord Genuity Group Inc. and National Bank Financial Inc. are among advisers to Atlantic, the company said in a separate statement.
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