The Australian gold rush to North America is accelerating.
St Barbara has joined Newcrest and Northern Star in spending up big on mines in either Canada or Alaska. Total spend so far has topped $2.2 billion.
The latest move by St Baraba follows Northern Star Resources’ acquisition of the Pogo gold mine in Alaska last year for $356 million and Newcrest Mining’s March announcement that it would acquire a 70% joint-venture interest in the Red Chris mine and surrounding tenements in British Columbia from Toronto-listed Imperial Metals Corp for $1.14 billion.
Shares in the gold miner, St Barbara are due to come out of a trading halt today at the end of the first stage of a $490 million raising to fund a major move into the North American gold industry.
St Barbara is buying Canada’s Atlantic Gold for $768 million as it looks to diversify and make the company “stronger for longer”.
Atlantic Gold owns the new Touquoy open-pit gold mine in Nova Scotia and has three others in development in a jurisdiction that St Barbara says is both prospective and favorable.
Touquoy produced its first commercial gold in early 2018, has an existing mine life of 12 years with substantial reserves and resources.
Trading was halted on Wednesday to allow the pro-rated, accelerated non-renounceable entitlement offer to start with major institutions. That was due to be completed and an issue to retail shareholders will then start.
The rest of the deal will be funded from current cash reserves.
The one-for-3.1 rights issue will be priced at $2.89, a 13% discount to St Barbara’s last traded price of $3.32.
The company has also negotiated a new $200 million revolving loan facility with Westpac to support the combined company.
St Barbara says the Canadian business would substantially diversify its production base, by adding operations in North America to its assets in Australia (Gwalia mine and associated processing plant), and Papua New Guinea (Simberi mine).
Directors of Atlantic control 32% of that company’s shares and have agreed to vote all of their holdings in favor of the deal. Some of the company’s senior and line managers have agreed to join St Barbara.