https://www.copyright link/companies/mining/billion-dollar-gold-deal-losing-shine-as-st-barbara-struggles-20230302-p5cox4
Billion-dollar gold deal at risk as St Barbara struggles
St Barbara’s disastrous $780 million acquisition ofAtlantic Gold is casting a big shadow over plans by Kerry Stokes-backed GenesisMinerals to consolidate gold assets in Western Australia and create a major newplayer known as Hoover House.Beaten-down St Barbara said on Thursday that it expected to put its Atlantic operations in Canada into care and maintenance soon after June 30.
St Barbara chairman Tim Netscher presided over theAtlantic acquisition.
The latest hit comes after St Barbara slumped to a$407 million first-half loss following big asset write-downs, including on theAtlantic operations it acquired in 2019.
Under the nil-premium Genesis merger proposalunveiled in December, the Simberi mine in Papua New Guinea and Atlantic would be spun out into a new ASX-listed entity known as Phoenician Metals, with 80 per cent of the stock sitting with St Barbara shareholders and the remainder owned by Hoover House.
The deal, which would see the Genesis managementteam led by Raleigh Finlayson take charge of Hoover and St Barbara’s flagshipGwalia mine in WA, was intended to leave Phoenician with two operating mines inSimberi and Atlantic.
St Barbara said on Thursday it had been asked bythe Nova Scotia minister of environment and climate change for information inresponse to an environmental assessment of plans to deposit tailings into theTouquoy open pit, which is Atlantic’s only operating mine.
“In the company’s view, compilation of theinformation required to answer the minister’s questions would indeed take moretime than is available before capacity of the existing tailings managementfacility is reached in early 2023-24,” St Barbara said in a statement to theASX.
“As a result, the company anticipates placing theoperations into care and maintenance at that time. The company will continue toengage with the Nova Scotian government.”
Latest twistThe request for information comes after St Barbaraissued a warning in January that any delay in approvals for the tailingsmanagement plan would bring about a halt in mining.
In August, St Barbara chairman Tim Netscher,who presided over the Atlanticacquisition, said: “The board remains convinced that Atlantic was an investment that was in the best interest of the shareholders and that it will generate meaningful and differentiating returns.”
A hedge fund manager, who did not want to be named,said the latest twist in the Atlantic saga should spell the end of the mergerwith Genesis.
“Today’s ruling from the Nova Scotian minister forenvironment will be the final nail in the coffin of the St Barbara-Genesismerger in its current form,” he said.
“The material change event renders Phoenician’sdemerger guidance redundant. We think this is a blessing for existing Genesisshareholders who were being walked into a forced marriage by a board andfunding syndicate seemingly unwilling to admit the reality that the target’sequity value had rapidly eroded to near worthlessness in the time since thedeal was launched.”
The first court hearing around the merger isscheduled for March 20 before a shareholder vote.
St Barbara finished the half-year with cash on handof $37.5 million, down from $98.5 million at June 30.
The company obtained a waiver from its banks inrelation to an interest cover ratio covenant, which includes a cap on furtherdrawdowns of $40 million until the Genesis merger is complete.
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