News: SBM UPDATE 1-Australia's St Barbara to buy Canadian peer Atlantic Gold for $536 mln

(Recasts throughout, adds St Barbara CEO comment)

May 15 (Reuters) - Australian gold miner St Barbara (SBM) said on Wednesday it would buy smaller Canadian peer Atlantic Gold Corp AGB.V for C$722 million ($536.4 million), in an all-cash deal.

St Barbara's C$2.90 per share cash offer represents a premium of 38.75% to Atlanta Gold's closing price on Tuesday.

"The addition of Moose River (Atlantic's flagship project) 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 Bob Vassie said.

The Australian miner added in a statement that it would raise about A$490 million ($340 million) to partly fund the bid, with the remainder coming from its own cash reserves.

Atlantic Gold Chairman and CEO Steven Dean would be invited to join St Barbara's board and the target's current operating team would be retained.

St Barbara expected to close the deal in July.

($1 = 1.3459 Canadian dollars)

($1 = 1.4413 Australian dollars)