KALGOORLIE (miningweekly.com) – ASX-listed Genesis Minerals is intent on pursuing its consolidation of the Leonara gold region, in Western Australia, saying on Monday that talks with gold miner St Barbara were still under way.

Genesis is in the midst of a takeover offer for gold miner Dacian Gold, having offering 0.0843 of its own shares for every Dacian share held, implying a value of 10.2c a share for the Dacian holding, and an equity value of A$111-million, based on Genesis’ last closing price.

The offer has been supported by Dacian directors, who have urged shareholders to accept the offer.

The deal would give Genesis access to Dacian’s large-scale strategic milling infrastructure at Mt Morgans, where Dacian announced plans to suspend openpit mining operations at the Jupiter deposit, as difficult conditions resulted in significant inflationary cost pressures, which in turn resulted in an increase in cost base, prompting a review of the operating strategy.

Speaking at the first day of the Diggers and Dealers conference, in Kalgoorlie, Genesis MD Raleigh Finlayson said the company’s approach to consolidation in the region was about "natural pairing".

“Dacian brings milling and mining infrastructure paired with Genesis’ growing resource base and not subjected to depletion every day by not having a mill. We have a 4.2-million-ounce resource base and we are preserving our long live 150 000 oz base case production plan.

“It's a genuine win-win transaction for shareholders, for Genesis shareholders would get access to A$150-million to A$160-million of capital savings for a new plant and Dacian shareholders get access to ore. We're not restarting mining with the same mine plan as a definition of insanity would be doing the same thing over and over and expecting a different result.  

“We also have access to a team that can deploy a lean owner-operator model all about reducing costs and increasing operational flexibility,” Finlayson said.

He noted that in the same vein, Genesis was continuing its talks with St Barbara, which held the Gwalia underground mine and a 1.4-million-tonne-a-year processing plant, as well as nearby development opportunities. 

Speaking on the sidelines of the conference, Finlayson said that there was an "openness and willingness" from players in the region to consider consolidation.

“I'd say we might have lit the fuse on that on those discussions, but for me, it's about making sure things get done as opposed to having this stalemate,” he said.

“I think there's a regional consolidation play that may take years to play out for a variety of reasons and that's ultimately to the benefit of having operational synergies matching the right rocks to the right mills. That milling district has doubled in capacity since 2014 and a lot of construction has already gone in there. For me, we don’t need to over-capitalise an area that has already been over-capitalised. What it needs is some sensible management teams and board teams to be able to recognize what makes sense for their shareholders.”