St Barbara to acquire Allied Gold's assets at 90 % premium

St Barbara Limited, one of Australia's mid-tier gold producers, has agreed to pay a 90-per cent premium in a $556 million cash-scrip offer for Allied Gold Mining Plc, a South West Pacific gold exploration company listed on the London Stock Exchange, the Australian Securities Exchange and the Toronto Stock Exchange.

Under the terms of the deal St Barbara will pay $1.025 a share cash and 0.8 of its shares for each Allied share, implying its target was worth $556 million.

The deal, expected to become effective in the third quarter of 2012, will create a $1 billion international diversified gold mining and exploration company with annual production of 435,000 ounces across mines in Western Australia and the southwest Pacific.

St Barbara has three mines and two processing plants at Leonora and Southern Cross, in the Eastern Goldfields region of Western Australia.

Allied Gold has two gold mines in operation - the Simberi gold project located on Simberi Island, the northern most island of the Tabar Islands Group in the New Ireland Province of eastern Papua New Guinea, and the Gold Ridge gold project located on Guadalcanal Island in the Solomon Islands.

St Barbara chief executive Tim Lehany says a $560-million deal does not amount to a loss of confidence in the Western Australia gold sector, despite having spent years looking for assets in Australia without doing a deal.