St Barbara unveils a massive merger deal with Genesis and a $275m capital raise to fund it
Nick Sundich, December 12, 2022
St Barbara (ASX:SBM) and Genesis Minerals (ASX:GMD) have unveiled a merger deal that will create a substantial ASX gold miner. The transaction will be funded with a $275m capital raising and the new company will be renamed Hoover House.
No time to do stock research, but you still want to invest?
Stocks Down Under Concierge gives you timely BUY and SELL alerts on ASX-listed stocks!
GET A 3-MONTH FREE TRIAL TO CONCIERGE TODAY
St Barbara hopes to end years of underperformance
St Barbara is down 56% in 12 months and ~80% in five years. You could attribute the past year’s underperformance to the lagging gold price, but not the last half-decade when gold briefly hit an all time high amidst the pandemic uncertainty.
The company, which has assets in Western Australia and PNG, has been let down by poorer than expected production figures, higher costs and lower profits. Tensions with the PNG government and skills shortages in WA haven’t helped either.
St Barbara (ASX:SBM) share price chart, log scale (Source: TradingView)
The industry’s worst kept secret is revealed
St Barbara executives have long sought to diversify the company through M&A. But in recent months, St Barbara itself has been viewed as a target, including by Genesis.
The cat was left out of the bag this morning. Genesis and St Barbara will combine their West Australian assets, offering a potential 350-400k ounces in production with over 4m ounces of reserves.
The deal will see St Barbara’s overseas assets being spun-off into a new company.
So what now?
In our view, there’s only one thing that’s certain. If history is any guide, spin-off companies hosting inferior assets do not perform well – so stay clear of the spin off.
What about Hoover House – should investors look at this new company? As good as it looks on paper, we think there’s little hope of share price growth until investor sentiment towards gold recovers.
No time to do stock research, but you still want to invest?
Stocks Down Under Concierge gives you timely BUY and SELL alerts on ASX-listed stocks!
GET A 3-MONTH FREE TRIAL TO CONCIERGE TODAY
No credit card needed and the trial expires automatically.
Blog Categories
Get Our Top 5 ASX Stocks for FY25
Recent Posts
US Credit Rating Downgraded—Here’s What Aussie Investors Should Know
The US Credit Rating Downgraded in 2025 has sent ripples across global markets, sparking intense debate among investors about what this…
Here are the biggest tax implications of investing in stocks and how to slash your bill
The tax implications of investing in stocks are not often considered when you first start investing, although you may get…
Nufarm (ASX:NUF): Hit by lower commodity prices, adverse weather and Trump’s tariffs
Have some sympathy for Nufarm (ASX:NUF). Companies capped at over $1bn rarely plunge 30% after reporting results unless the results…