St Barbara and Allied Gold Mining have reached an agreement which will see Allied acquired by St Barbara, which is one of Australia’s larger mid-tier gold producers.

St Barbara has three mines and two processing plants at Leonora and Southern Cross, in Western Australia’s Eastern Goldfields. The company’s measured and indicated mineral resources contain 5.2 million ounces of gold in more than 5000sqkm of prospective tenements across Australia.

The company’s flagship Gwalia mine at Leonora has an ore reserve grade of 8.9 grams/tonne gold, an expected mine life of at least eight years, and remains open to the south and at depth. It will pay for the acquisition with existing funds along with a $120 million loan.

Allied is a South West Pacific gold producer, developer and exploration company with two gold mines in operation - the Simberi project on Simberi Island in eastern Papua New Guinea, and the Gold Ridge gold project on Guadalcanal Island in the Solomon Islands.

Allied also controls 100% of the 260sqkm Tabar-Tatau exploration licences, which includes all of the Tabar Islands group not covered by the mining lease for Simberi. Its measured and indicated mineral resources contained 5.2 million ounces of gold, with a further 3.8 million ounces of gold of inferred resources.

St Barbara’s managing director Tim Lehany says, “The strategic and financial logic of the combination is clear. It will deliver a more diversified asset portfolio spanning exploration to gold production. Strong and sustainable cash flow generation from the Gwalia mine in particular complements the significant growth potential at Simberi, where the geological potential to increase mineral resources and production is substantial.

Allied chairman Mark Caruso says, “We believe it to be a unique transformational opportunity with the potential to realize an immediate premium for shareholders. The combined group will have a declining cost profile and exciting growth potential through near-term project development and exploration upside.”

www.stbarbara.com.au or www.alliedgold.com.au