Bardoc Gold Ltd (ASX:BDC) and ASX-200 gold producer St Barbara Ltd (ASX:SBM) have entered into a binding scheme implementation deed which will see St Barbara acquire Bardoc and consolidate gold assets in the Leonora region of Western Australia.
The acquisition will take place via a board recommended scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth), subject to the satisfaction of various conditions, and values Bardoc at approximately $157 million and each Bardoc share at $0.530.
This news has sent Bardoc shares up as much as 19.6% to an intraday high of A$0.49.
Follows strategic review
Execution of the implementation agreement follows the completion of a strategic review of the Bardoc Gold Project initiated by Bardoc in September 2021 and through which St Barbara was identified as the logical owner of this project.
As well as proximity to St Barbara’s Leonora assets and processing plant, rail and highway links directly connect Bardoc’s key assets with the plant.
The agreement also includes a proposed spin-out of Bardoc’s South Woodie Woodie Manganese Project in Western Australia into a new separate vehicle, which represents additional value for Bardoc shareholders.
Filling the mill
St Barbara managing director and CEO Craig Jetson said: “St Barbara has been focused on expanding our footprint within the Leonora Province to fill the mill by growing our deposits, through acquisitions and exploration.
"Acquiring Bardoc Gold unlocks access to extensive land packages near our Leonora Operations.
"The location of the Bardoc Gold Project, situated near the rail line and highway to the south of Leonora, brings the Bardoc ore bodies within economic haulage range of our Leonora processing plant.
"Combined with our existing regional opportunities such as Tower Hill and Harbour Lights, the acquisition of Bardoc facilitates the accelerated delivery of a multi-decade province of satellite mines feeding the Leonora processing plant.
"This provides St Barbara with significant operating flexibility and value as part of the Leonora Province Plan.
"We want to acknowledge the excellent work by the Bardoc team to assemble this impressive land position and progressing the Bardoc Gold Project to this point.”
3.07-million-ounce resource
Bardoc Gold’s project-wide measured, indicated and inferred resource is 54.6 million tonnes at 1.8 g/t for 3.07 million ounces of contained gold. This includes 8.4 million tonnes at 3.7 g/t for 988,000 ounces that may be amenable to underground mining methods.
Within this is a JORC (2012) probable ore reserve estimate of 15.87 million tonnes at 2.0 g/t for 1.01 million ounces including 3.14 million tonnes at 3.4 g/t at Aphrodite underground and 839,000 tonnes at 3.6 g/t at Zoroastrian underground.
On a pro forma basis, the arrangement will see St Barbara shareholders own about 87% and Bardoc shareholders approximately 13% of all issued St Barbara shares.
Bardoc shareholders will receive 0.3604 new St Barbara shares for each Bardoc share they hold and the implied valuation represents:
- A 29.2% premium to the closing price of Bardoc shares on December 17, 2021 (last closing date); and
- A 34.7% premium to the 30-day VWAP of Bardoc shares of $0.393 for the period ended on the last closing date.
BDC has a market cap of $118.68 million while SBM has a market cap of approximately $1.04 billion.
Benefits to BDC shareholders
For Bardoc shareholders, the transaction delivers a number of benefits:
- Delivery of an immediate and significant premium to the undisturbed share price of Bardoc Gold;
- Exposure to St Barbara as a leading ASX-200 gold producer with a globally diversified asset base, strong balance sheet, enhanced trading liquidity and future market re-rating potential;
- Ability for Bardoc shareholders to participate in the benefits of the combination, including a clear pathway to development of the Bardoc assets under St Barbara ownership; and
- Retention of exposure to and full ownership of the South Woodie Woodie manganese asset in the East Pilbara region of WA via a proposed spin-off company, which may consider seeking a listing on the ASX in the future, subject to all necessary regulatory and other approvals.
“Very positive outcome”
Bardoc Gold chairman Tony Leibowitz said: “The strategic review we initiated in September has delivered on its key objectives and secured a very positive outcome for Bardoc shareholders with an attractive transaction that delivers a substantial premium while providing exposure to two significant growth opportunities in gold and battery metals.
"Considering that we only commenced the strategic review just over two months ago, we have achieved a great deal in a very short space of time, and I would firstly like to acknowledge the hard work of the Bardoc team, our key advisers and also the extremely professional manner in which St Barbara has approached this transaction.
"We undertook the review in light of the significant challenges confronting Bardoc as a junior developer aiming to bring a new project on stream in the face of cost pressures in the WA resource sector.”
“Courageous decision”
He said: "The board made the courageous decision to halt our development activities and consider alternative strategic pathways for our cornerstone asset, and we believe this was the right call for our shareholders.
"The transaction we have secured with St Barbara is an excellent outcome which will deliver ownership of the Bardoc Gold Project to a much larger company with the balance sheet strength, resources and technical capability to bring the project into production through its Leonora gold operations.
"In addition to creating a liquidity event, the transaction delivers a healthy premium and will give our shareholders approximately 13% ownership of an enlarged St Barbara – providing exposure to a much larger, diversified international gold producer with operating assets and a strong development pipeline in Australia, PNG and Canada.
"We believe there is excellent potential for a future market re-rating and value uplift.
"At the same time, we have reached agreement with St Barbara to proceed with a spin-out of our South Woodie Woodie manganese assets. This represents an exciting opportunity for Bardoc shareholders to receive shares via an in-specie distribution in a new battery metals-focused company led by one of the most experienced corporate teams in Australia with a proven track record in value-creation."
St Barbara benefits
For St Barbara, the acquisition of the advanced Aphrodite and Zoroastrian underground deposits, which lie immediately adjacent to the rail line that runs to the Leonora processing plant, provides the opportunity to accelerate St Barbara’s Leonora Province Plan including:
- Integration of the Zoroastrian underground project into the Leonora Province Plan as a source of near-term mill feed; and
- The mining of ore from the Aphrodite underground refractory deposit provides a high margin opportunity to accelerate the installation of refractory treatment capacity at the Leonora processing plant ahead of development of the Harbour Lights deposit.
St Barbara’s ongoing pre-feasibility study of growth initiatives at Leonora has identified open pit mining as the preferred development option for the Tower Hill deposit, which has facilitated the declaration of an increased mineral resource estimate of 1.2 million ounces.
The combined mineral resource across Gwalia Underground, Tower Hill and the refractory Harbour Lights deposit provides a substantial foundation for a low-cost expansion of the existing Leonora processing plant from 1.4 to 2.1 million tonnes per annum.
About Bardoc Gold Project
Bardoc Gold Project covers 447 square kilometres of granted mining tenure and comprises:
- Aphrodite Underground Refractory and Open-Pit projects;
- Zoroastrian Underground and Open-Pit projects;
- Excelsior Open-Pit Project;
- Bulletin South Project;
- Mayday North Open-Pit Project;
- Mulwarrie Project;
- North Kanowna Star Project; and
- Other smaller deposits such as Talbot North, Duke North, Lochinvar and Eldorado.
Bardoc Gold has received Mining Proposal and Closure Plan approval for development of the Zoroastrian underground deposit from the Department of Mines, Industry Regulation and Safety (DMIRS).
The Mining Proposal and Closure Plan for Aphrodite has also been submitted to DMIRS and will be amended as needed to suit St Barbara’s final mining approach for the underground deposit.
St Barbara has appointed Macquarie Capital (Australia) Limited as its financial adviser and King & Wood Mallesons as its legal adviser.
Bardoc has appointed Argonaut PCF as its financial adviser and Steinepreis Paganin as its legal adviser.