Australia’s St. Barbara Ltd. is buying Canada’s Atlantic Gold Corp. in a friendly transaction worth $722-million – more evidence of a resurgence in deal-making in the global gold sector. Vancouver-based Atlantic owns and operates a small but very profitable gold mine in Nova Scotia.
St. Barbara is paying $2.90 a share for Atlantic, about a 40-per-cent premium to the Tuesday closing price. In addition, shareholders will receive the equivalent of 5 cents a share in a spin-off company that will hold Atlantic’s equity stake in Velocity Minerals Ltd., a small development stage company.
St. Barbara is funding the deal through a mix of cash on hand and proceeds from an equity issue. In an interview, Atlantic’s chief executive officer Steven Dean said there was “a good deal of interest from a number of parties,” but that St. Barbara’s offer, which was almost all-cash, was particularly compelling.
The transaction value is “fair” and with a $25-million break fee in place the risk of a competing bid is low, PI Financial analyst Chris Thomson wrote in a note to clients on Wednesday.
Located about an hour’s drive from Halifax, Atlantic’s Moose River open-pit gold mine went into production last year. The property should produce about 95,000 ounces of gold this year at an all-in sustaining cost (AISC) of US$544 an ounce.
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