LA Private

Third wheel intrigue leaves Leonora anything but spoken for

Silver Lake Resources (ASX:SLR) won’t go away and is adding more pressure on St Barbara to break its wedding banns with Genesis Minerals and sell its Leonora gold mining assets.

Of course, the buyer of choice is Silver Lake which wants to buy the Gwalia and other assets at Leonora that have almost sunk St Barbara.

This curiously late bidding war (Genesis first did a deal last December) has seen Silver Lake repeatedly raise its offer to buy St Barbara’s Leonora assets to $722 million via a higher cash component.

Friday saw it lift its offer for another time when it lifted the cash component of its proposal by $44 million, after the its revised offer of $707 million was rejected by St Barbara early last week, citing a lack of synergies.

St Barbara has rebuffed Silver Lake multiple times in favour of a revamped $600 million proposal from Genesis Minerals which has gold mining assets in the same region of WA’s eastern Goldfields.

That makes it five different offers in all for the troubled assets.

Silver Lake’s latest offer represents a premium of 20.3% to Genesis’ second offer. It also matches the $370 million in cash on offer by Genesis.

L1 Capital, a 9.34% shareholder in St Barbara, confirmed in Silver Lake’s announcement late Friday that it is supportive of St Barbara engaging with Silver Lake to progress the “Improved Proposal” to binding offer stage.

“L1 Capital intends to vote its St Barbara shareholding against the Genesis Transaction at any meeting of shareholders convened to consider the transaction,” the Silver Lake statement revealed.

Silver Lake reiterated its commitment to complete its targeted due diligence enquiries within two weeks of being provided access to the relevant material. It also claimed that its improved offer “further addresses concerns about residual St Barbara liquidity.”

“The Improved Silver Lake Proposal provides equivalent cash consideration to the Genesis Proposal, in addition to continuing to provide St Barbara shareholders with immediate exposure to a larger, more liquid and diverse gold business with increased leverage to the Australian dollar gold price and a robust balance sheet with strong forecast operating cash flow following a period of significant investment in H1 FY23 to support the growth profile,” Silver Lake said Friday night.

The latest proposal consists of 327.1 million Silver Lake shares (valued at $352 million) and an increased cash component of $370 million cash (previously $326 million).

“Silver Lake has zero debt, approximately A$268 million in cash and bullion (as at 31 March 2023) and a clean, transparent balance sheet and capital structure,” it said in the statement.

“To date, St Barbara has not been willing to discuss or agree a due diligence scope or timetable with Silver Lake in respect of its numerous competing proposals to acquire the Leonora Assets.

“In Silver Lake’s view, the St Barbara board’s delay in engaging with Silver Lake on its competing proposals has contributed to the “significant timetable risk” that the St Barbara board has sought to justify its reasons (amongst others) for not engaging with Silver Lake.”