St Barbara won't engage with Silver Lake

23rd May 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia


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PERTH ( – The board of gold miner St Barbara on Tuesday said it would not engage with fellow-listed Silver Lake Resources over the potential sale of its Leonora assets, calling into question shareholder support for Silver Lake’s proposed offer.

Silver Lake at the end of last week again revised its non-binding, indicative and conditional proposal for St Barbara’s Leonora assets, and is now offering A$370-million in cash and 327.1-million of its own shares.

Silver Lake at the time claimed that the company had sought constructive engagement with the St Barbara board over the last 12 months, regarding a potential transaction, and stated that St Barbara had been unwilling to "meaningfully engage".

St Barbara on Tuesday hit back at the claims, noting that while Silver Lake had first approached the company in mid-2022, and subsequently in September of last year, regarding the potential acquisition of St Barbara, the miner had declined to submit a non-binding indicative offer to allow St Barbara to assess the merits of Silver Lake’s interest while it was in the midst of merger opportunity discussions with three other companies, including Genesis Minerals and Red 5.

“Silver Lake had ample opportunity between September and December 2022 and in the ensuing period to make a non-binding indicative proposal that would be capable of being considered over more realistic time frames. Instead Silver Lake waited almost five months until April 28, 2023 to make its first non-binding, indicative and conditional proposal. The proposals have been made at a time that is least likely to allow constructive engagement with St Barbara and at a time that causes maximum disruption to St Barbara’s completion of the transaction agreement with Genesis, including the St Barbara shareholder vote,” St Barbara said in a statement.

Furthermore, the miner noted that while Silver Lake’s revised conditional proposal would support the liquidity of St Barbara going forward, the proposal remained non-binding and unacceptably conditional, contrasting to the fully documented, fully financed and shareholder-supported binding agreement from Genesis.

In the event that Silver Lake could provide a binding proposal, the offer would still be subject to the whim of its shareholders, St Barbara noted, which would leave St Barbara’s own shareholders exposed to the outcome of the Silver Lake vote and the potential failure to satisfy any other remaining conditions precedent to the proposal.

“No indication of Silver Lake shareholder support has been provided by Silver Lake (notwithstanding St Barbara’s written request), and St Barbara has no basis for expecting that Silver Lake can deliver a satisfactory level of certain shareholder support in the time available,” St Barbara stated, pointing out that Silver Lake’s share price had decreased by a total of 19% since the company launched its first proposal for the Leonora assets, indicating a lack of shareholder confidence in the transaction.

“The binding Genesis transaction is fully and definitively documented, fully funded by a committed A$400-million capital raising, not subject to due diligence, supported by a A$25-million deposit and has received indications of support from some 49% of Genesis’ register,” said St Barbara chairperson Kerry Gleeson.

“Silver Lake’s latest proposal would still require termination of the binding Genesis transaction before the satisfaction of conditions attached to the Silver Lake proposal, including a Silver Lake shareholder vote. Silver Lake was given the opportunity to make a non-binding indicative offer in September last year and it did not do so. Instead Silver Lake has waited until the eleventh hour to demand that St Barbara entertain a disruptive and unrealistic two week due diligence exercise without any indication that Silver Lake shareholders would ever approve the proposal themselves.”

The miner again pointed to the level of synergies which could be achieved through the Genesis transaction, as opposed to the Silver Lake proposal, and noted that any delay to the Genesis transaction beyond the June 30 deadline for the shareholder meeting, would result in 52.2-million Genesis shares becoming contingent on the Tower Hill project achieving first production, rather than those shares being accelerated and being received immediately upon completion of the transaction.

St Barbara told shareholders that should the company lose the binding Genesis transaction either as a result of disruption to the shareholder meeting, or undue delay resulting from distraction of St Barbara engaging with Silver Lake, the A$400-million Genesis capital raising, which would deliver the funding requirements to establish both the Leonora operations and St Barbara’s overseas assets, would be terminated, and that St Barbara was likely to again breach debt covenants at the end of June, and with the transaction uncertainty, would lose the basis of the waiver of the covenant breach at the end of December last year.

Furthermore, the miner warned that losing the Genesis transaction would also result in workforce uncertainty, which would create additional operating pressures at the Leonora operations, in particular.


Edited by Creamer Media Reporter



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