St. Barbara board approves acquisition

Company News

Shares in St. Barbara Limited (ASX:SBM) plunged more than 13 per cent yesterday, despite its announcement that the board has agreed to combine its business with Allied Gold Mining (ASX:ALD).

The gold explorer and producer says the alliance will create an international diversified gold mining and exploration company with forecast gold production of about 435,000 ounces in the 2013 financial year.  The deal will see St Barbara acquire two assets in Papua New Guinea and the Solomon Islands.

Under the recommended offer, St Barbara would acquire Allied Gold for $1.025 per share in cash and giving Allied shareholders 0.8 St Barbara shares for each Allied Gold share, valuing Allied at $556 million.

St Barbara intends to delist Allied from the ASX, the Toronto and London stock exchanges to become a wholly owned subsidiary of the company.

The offer is subject to approval from Allied Gold shareholders and regulators.

In the first half of the 2012 financial year St Barbara generated a net profit of $46.5 million.