St Barbara and Allied Gold have unveiled a merger plan aimed at creating an international gold producer and explorer with a market capitalisation of more than $1 billion.
St Barbara announced today an offer of $1.025 in cash and 0.8 St Barbara shares for each Allied Gold share, valuing the target at around $556 million.
Allied's board of directors has unanimously recommended shareholders accept the offer via scheme of arrangement.
At 12:00 PM, WST, Allied Gold shares had rocketed 63 per cent on the ASX, up 90 cents at $2.35, while St Barbara stocks had lost 29 cents, at $1.83.
The combined group will have an expected gold production of around 435,000 ounces for the 2013 financial year, with three established mines, Gwalia and Marvel Loch in WA and Simberi in Papua New Guinea, and a fourth in the Solomon Islands ramping up to production.
St Barbara managing director Tim Lehany said the strategic and financial logic of the merger was clear.
“It will deliver a diversified asset portfolio spanning exploration to gold production,” Mr Lehany said in a statement.
“Strong and sustainable cash flow generation from the Gwalia mine in particular complements the significant growth potential at Simberi, where the geological potential to increase mineral resources and production is substantial.”
Allied Gold chairman Mark Caruso said the company's board of directors saw the offer as a “unique transformational opportunity”.
“The transaction has the certainty of cash consideration coupled with an equity component to enable participation in the significant upside potential of the combined group,” he said.
