St Barbara, an Australian gold miner, stated Wednesday it is going to purchase smaller Canadian Peer Atlantic Gold Corp for C$722 million ($536 million), marking a second abroad acquisition for cashed-up Australian producers.
St Barbara’s C$2.90 a share money offer represents a 39% premium to Atlanta Gold’s closing value on Tuesday in a deal that analysts mentioned opened up development choices, but may result in a call on capital and pinch dividends.
“Purchasing an unknown asset in a different nation which doubtlessly requires a recent investment of capital… could show an extra barrier for some investors,” stated RBC Capital in a report.
The offer, which has the support of Atlantic’s board, comes after Australian gold miner Newcrest Mining Ltd purchased a copper and gold mine in Canada for $806.5 million in March and stated it had the firepower for more acquisitions.
Australian greenback denominated gold is shy of January’s record of A$1,894 an oz and up about 9% from last year, whereas U.S. greenback gold is nearly flat.
Atlantic Gold, whose flagship venture is the Moose River mine in Nova Scotia, mentioned the bid delivered a handsome return to shareholders. Administrators of Atlantic who hold 32% of shares had agreed to support the proposal.
St Barbara mentioned it would raise about A$490 million ($340 million) to partially fund the bid, with the rest coming from its cash reserves.
“The addition of Moose River to the portfolio diversifies St Barbara’s manufacturing base with a low price producing resources in a favorable and potential jurisdiction,” St Barbara Chief Executive Bob Vassie stated.
Atlantic Gold Chairman and CEO Steven Dean can be invited to hitch St Barbara’s board, and the corporate’s working crew would be retained. St Barbara anticipated inking the deal in July.