Gold production and exploration group Silver Lake Resources [ASX:SLR] has been competing for St Barbera’s [ASX:SBM] high-grade Gwalia gold assets in WA, having thrown its hat into the ring last week in a bid against Genesis Minerals [ASX:GMD].
At the time of writing, SLR had dropped by more than 4% in share price while St Barbera had bumped up by 3.5% in the wake of the interest from third parties.
Competing bidder Genesis Minerals — though appearing to appeal more to SBM than SLR — has also fallen by 1.5%.
St Barbara dismisses Silver Lake’s generous offer in favour of Genesis
Last week, Silver Lake put in a revised offer to acquire St Barbera’s Leonora assets after the selling miner expressed concerns regarding conditionality, timing, and residual liquidity.
Silver Lake’s revised offer consisted of a total proposed consideration of $707 million — comprising $326 million cash and 327.1 million shares (valued at $3811 million).
This, the miner insisted, represented a significant premium to that provided by Genesis Minerals.
However, Silver Lake wasn’t the only one sweetening the pot.
Genesis had eyed Silver Lake’s endeavours and increased the scrip section of its offer to enhance its standing in the battle for SBM’s flagship Gwalia gold mine.
The cash component remains at $370 million, but Genesis did up its scrip component by 5 million shares (now 152.8 million) and waived conditions around performance rights issues.
St Barbara subsequently valued the new Genesis offer at $631 million, and at $657 million for the Silver Lake cash and scrip offer, choosing to reject the latter based on timing and security concerns.
St Barbara expressed a preference for Genesis’ legally binding and fully funded elements of the deal, which can be completed by the end of June, whereas Silver Lake’s timetable was pushing more towards August.
Since Silver Lake’s fall of over 20% in the past month, the bid also became less attractive to SBM. To make things more of a challenge, Genesis’ upped offer adds to its existing shareholding interest which it already holds in St Barbara.
The revised Genesis offer includes a $25 million deposit and will allow St Barbara shareholders to keep around 19.9% of the stock.
St Barbara has also waived the break fee on Genesis in a show of goodwill.
Silver Lake might miss out on this one today, but there’s plenty more corporate activity happening within the industry, particularly as some of the larger producers continue swooping in on the smaller ones.
Silver Lake has also made a bid to Chester Resources [ASX:CHZ], a small gold explorer. This shows there are more opportunities for growing assets in the pipeline, even if they might get off to a slow start.
Now that gold is approaching all-time highs in US dollar terms, some new deals could be coming through for the sector. However, we might need to wait a couple of months to see some interest return to the smaller end of the market.
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