Atlantic Gold Corporation

St Barbara to acquire Canadian gold producer Atlantic in AUD $768M deal

St Barbara Ltd. (ASX: SBM) has announced that it has entered into a Canadian Plan of Arrangement Agreement with TSX-listed low-cost gold producer, Atlantic Gold Corporation (TSX-V: AGB).

As per the agreement, St Barbara will acquire 100% of AGB for an all-cash offer price of C$2.90 per Atlantic share. This translates to a total equity value of C$722 M (A$768 M) and a total enterprise value of C$802 M (A$854 M). It may be noted that the Transaction excludes Atlantic’s 36% interest in Velocity Minerals Ltd.

St Barbara said that the acquisition is aligned with its strategy to diversify production base with a low-cost, long-life mine in a favourable jurisdiction and to have increased growth potential through planned reserve and resource expansion. Atlantic’s Chairman and CEO Mr. Steven Dean is expected to join the St Barbara Board.

Atlantic Gold Corporation

Atlantic Gold Corporation owns and operates Moose River Consolidated in Nova Scotia, Canada. Moose River has mineral resources of 2.4 Moz inclusive of mineral reserves of 1.9 Moz.

Moose River comprises one producing open-pit, Touquoy; and three others in development, Beaver Dam, Fifteen Mile Stream, and Cochrane Hill.

Lock-up Agreement

The company reported that Atlantic’s Directors and officers which control 32% of the register have entered into a lock-up agreement in favor of acquisition by SBM.

According to the agreement, St Barbara will acquire 100% of all outstanding Atlantic shares on a fully diluted basis at an all-cash offer price of C$2.90 per Atlantic share, implying a total equity value of C$722 M (A$768 M) and a total enterprise value of C$802 M (A$854 M).

The Transaction excludes Atlantic’s 36% interest in Velocity Minerals Ltd. (TSX-V: VLC) which will be spun out to existing Atlantic shareholders following completion.

SBM has entered into the transaction through its wholly owned subsidiary Nord Pacific Ltd. Completion is anticipated to occur in July 2019.

It may be noted that the Transaction is subject to customary commercial conditions, including court approvals and a successful Atlantic shareholder vote, no material adverse change to Atlantic and Nova Scotia regulatory approvals.

Highlights of Transaction

Key highlights of the Transaction include diversification of St Barbara’s production base by adding a low-cost asset in a favourable jurisdiction; further improvement of St Barbara’s cost profile with MRC’s low AISC position; addition of a sustainable long life operation, with an existing mine life of 12 years and substantial reserves and resources; significant growth potential at MRC through planned resource and reserve expansion as well as near mine exploration; providing St Barbara with a platform for future growth in an attractive mining jurisdiction with low geopolitical risk; retention of key Atlantic executives and the operating team to ensure continuity of operations and relationships with key Canadian stakeholders; and opportunities for St Barbara and Atlantic to leverage existing strengths and capabilities and establish a platform for growth in the region.

Source of Fund for Acquisition

St Barbara announced that A$490 M will be raised through an underwritten pro-rata accelerated non-renounceable entitlement offer to partly fund the Transaction. The remaining amount is planned to be funded via St Barbara’s existing cash reserves.

In addition, St Barbara has also secured a new committed A$200 M three year revolving loan facility with Westpac Banking Corporation to support the combined company.


SBM said that at the completion of the Transaction, which is expected to occur in July 2019, Atlantic and its associated entities will become part of St Barbara’s corporate structure, with Atlantic shares de-listed from the TSX. Chairman and Chief Executive Officer of Atlantic, Mr. Steven Dean will also join the St Barbara Board following completion.

CEO Statement

St Barbara Managing Director & Chief Executive Officer, Bob Vassie said: “St Barbara has today announced the acquisition of Atlantic, owner and operator of Moose River Consolidated.

St Barbara has consistently communicated to the market that the Company has been assessing a range of inorganic growth opportunities and the acquisition today demonstrates the Company’s commitment to executing inorganic growth that is strongly aligned with St Barbara’s strategic plan.

The addition of Moose River to the portfolio diversifies St Barbara’s production base with a low cost producing asset in a very favourable and prospective jurisdiction.

It is a sustainable long life operation of scale with a low AISC position which generates impressive margins. The asset also has significant growth potential which St Barbara identifies as an exciting opportunity.

Further, we are gaining an impressive team with an excellent track record of successfully bringing deposits into operation which gives us a great capability and platform for further opportunities in the region.

St Barbara is confident that Moose River can successfully be integrated into St Barbara’s existing asset portfolio and deliver long term value for St Barbara shareholders.”

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Written By Christopher Norris
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