Australian gold miner St Barbara to acquire Atlantic Gold for $536 million

ASX-listed gold producer St Barbara is set to complete a US$536 million deal to buy Canadian miner Atlantic Gold Corp, as mergers and acquisitions (M&A) activity continues to ramp up in the global gold sector this year.

Melbourne-based St Barbara offered C$2.90 a share for Atlantic Gold, representing a 39% premium to the TSXV-listed company’s closing price on Tuesday. St Barbara will fund the deal from cash reserves and by raising about US$340 million in a share sale to existing holders.

The bid has already been accepted by St Barbara’s investors, and will give the company access to Atlantic Gold’s Moose River Complex in Nova Scotia. The complex is comprised of the producing open pit Touquoy mine, along with three others currently in development.

“St Barbara’s offer not only recognises the value of our current plan for the MRC Mine, but rewards shareholders for the future growth and exploration potential,” said Atlantic Gold’s chairman and chief executive Steven Dean in a separate statement.

St Barbara’s deal for Atlantic Gold is the latest in a wave of consolidation taking place in the gold sector, following the highly publicised multi-billion dollar mergers of Barrick Gold and Randgold Resources and Newmont Mining and Goldcorp earlier this year.

“We can expect even more M&A activity in the near future,” said PwC Canada national mining leader Dean Braunsteiner last month. “That creates a cascading effect of further deals as companies sell off non-core assets, which brings new opportunities for management teams to build the next big Canadian mining company.”