Genesis Minerals Limited (ASX: GMD) (Genesis) and St Barbara Limited (ASX: SBM) (St Barbara) have agreed to a merger under which St Barbara will acquire 100% of the shares in Genesis via a Scheme of Arrangement (Scheme) and will be re-named Hoover House Limited (Hoover House)
Genesis shareholders to receive 2.0338 new fully paid ordinary shares in St Barbara for each Genesis share held at the Scheme record date, representing a nil premium to the 30-day volume weighted average price
St Barbara to undertake demerger of Atlantic, Simberi and other assets (including St Barbara's shares in various ASX-listed entities) to St Barbara shareholders in conjunction with the Scheme, to be held in a company to be known as Phoenician Metals Limited (Phoenician or Phoenician Metals), which intends to apply to list on the ASX (Demerger)
Genesis to raise A$275 million to fund the merged entity and facilitate the transaction, conditional on the Scheme and Demerger becoming effective (Capital Raising)
The Scheme is unanimously recommended by the Genesis Board subject to no superior proposal emerging and the Scheme Independent Expert concluding (and continuing to conclude) that it is in the best interests of Genesis shareholders
The St Barbara Board intends to unanimously recommend the Demerger1
HOOVER HOUSE MERGER HIGHLIGHTS
Genesis and St Barbara are pleased to announce that they have entered into a binding Scheme Implementation Deed (SID) under which the two companies will merge. The Scheme will create one of Australia's leading gold houses, with a long-life, high quality asset base and substantial potential for organic growth, to be newly named Hoover House Limited. It is intended that Hoover House will be headquartered in Perth, Western Australia with a new strategic plan and five-year outlook to be announced to the market in September quarter 2023, post completion of the merger. Hoover House will have a production target of +300kozpa2 , compared to St Barbara's standalone FY23 production guidance of 145-160koz for Leonora3 with year-to-date actual production of 56koz4 . The merger of St Barbara and Genesis is expected to unlock substantial, near-term synergies for both sets of shareholders. The resetting of the combined entity's corporate support model, a write up of Genesis' depreciable tax cost base, and deferment of capital in relation to the Gwalia mill is expected to result in synergies with a net present value of approximately A$200 million5 . Overall, the merger will either defer or eliminate ~A$400 million5 of capital expenditure, reducing near-term execution risk and funding requirements. Following the Scheme, it is expected that Hoover House will retain a 20% shareholding in Phoenician Metals. In connection with the Scheme, Raleigh Finlayson is to be appointed Managing Director and Chief Executive Officer of Hoover House and Tony Kiernan will be appointed as Chair. The Board of Hoover House will comprise four Directors from St Barbara, two Directors from Genesis and one new Board member.
The transaction will create a leading Australian gold house with:
1. Industry-leading sustainability initiatives, engagement and reporting;
2. Long-life gold production, supported by 3.2 Moz in Ore Reserves and 14.7 Moz in Mineral Resources;
3. 'Pathway to +300kozpa'
2 organic growth trajectory in Leonora with low capital intensity;
4. Net present value of ~A$200 million in post-tax synergies5;
5. Key executives aligned with shareholders, Board and Management owning ~A$24 million of combined equity;
6. A strong balance sheet, having an A$187 million pro-forma net cash position as at 30 November 20226 ;
7. The scale, liquidity and quality to be attractive to both gold and generalist investors; and
8. Potential re-rate to 'fill the gap' between the ASX 100 gold producers and the rest.
On 5 July 2022, Genesis announced an off-market takeover for Dacian Gold Limited (ASX: DCN) (Dacian). On 15 September 2022, Genesis declared that its takeover offer for Dacian was unconditional. The offer will be extended to 16 January 2023. Genesis currently holds 77.01% of all Dacian fully paid ordinary shares
St Barbara Chair, Tim Netscher, said: 'I am confident that this unique transaction will deliver significant value for all shareholders. The merger with our Leonora neighbour, Genesis, to create Hoover House, will accelerate our Leonora Province Plan. Shareholders will reap the benefits of more production at lower cost and lower risk from this prolific mining district.' 'A significant component of the value delivered by the creation of Hoover House is the unique synergies delivered by the resultant combination of assets, such as the ability to sensibly stage the development of the various orebodies and to match one party's ore to the other party's mill capacity.' 'In parallel, select assets including Atlantic and Simberi will be de-merged to create Phoenician Metals. This will provide an opportunity for shareholders to realise the long-term value of this well-endowed portfolio in a dedicated vehicle with a high-quality management team. Phoenician Metals will attract stronger investor attention and valuation in a stand-alone entity, while allowing Hoover House to focus 100% on the Leonora District'.
Genesis Managing Director, Raleigh Finlayson, said: 'This merger is a major step forward in the strategic journey Genesis embarked on less than 12 months ago. By combining with St Barbara, we are creating Hoover House, the premium Australian gold company we envisaged, with sustainable, high-quality production'. 'Sensible M&A is a key component of our multi-pronged growth strategy, and our team has a strong track record of executing accretive transactions. Consolidation of the world-class Leonora District is a natural fit for Genesis.' 'The close proximity of the combined company's core Leonora assets, the ability to unlock substantial synergies and the clear path to a market re-rate makes this the right deal for both Genesis and St Barbara shareholders'.
DETAILS OF THE SCHEME Under the terms of the Scheme, each Genesis shareholder will receive 2.0338 St Barbara shares for each Genesis share held on the Scheme record date. The Scheme consideration represents a nil premium to the 30-day VWAP of Genesis shares (based on the ASX trading of St Barbara and Genesis shares up to and including 9 December 2022). Upon implementation of the Scheme, St Barbara shareholders will own 38% of the combined entity, in addition to directly holding 80% of Phoenician Metals. The remaining 20% of Phoenician Metals will be held by Hoover House. Genesis shareholders will own 41% of Hoover House and participants in the Capital Raising will own 22%7 . The Genesis Board of Directors unanimously recommends that Genesis shareholders vote in favour of the Scheme and each Genesis Director intends to vote all the Genesis shares that they hold or control in favour of the Scheme (in both cases, subject to the Scheme Independent Expert opining that the Scheme is in the best interests of Genesis shareholders and in the absence of a superior proposal)8 .
Key conditions to the implementation of the Scheme include:
Approval being obtained from Genesis shareholders in relation to the Capital Raising, as well as approval by Genesis shareholders and court approval in relation to the Scheme; Approval being obtained from St Barbara shareholders in relation to the Demerger and the issue of St Barbara shares under the Scheme; The Scheme Independent Expert concluding that the Scheme is in the best interests of Genesis shareholders, and not changing, withdrawing or qualifying that conclusion; The Demerger Independent Expert concluding that the Demerger is in the best interests of St Barbara shareholders, and not changing, withdrawing or qualifying that conclusion; No material adverse effect, prescribed event or regulated event (each as specified in the SID) occurring in relation to either St Barbara or Genesis
HOOVER HOUSE BOARD AND MANAGEMENT
Hoover House will benefit from the combined skills and experience of the Boards and management teams from both St Barbara and Genesis. Upon completion, the Board of seven will comprise four Directors from St Barbara (Tim Netscher, Dan Lougher, Stef Loader and Kerry Gleeson) and two Directors from Genesis (Tony Kiernan, and Raleigh Finlayson). Jacqueline Murray will join the Board as a new Independent Non-Executive Director9 . Female representation will exceed 40%. St Barbara Non-Executive Chair Tim Netscher will be a Non-Executive Director on the combined new Board for a transition period and does not wish to seek re-election at the next AGM, expected in October or November 2023. It is intended that the remaining Non-Executive Directors of Genesis (Gerry Kaczmarek, Michael Bowen, and Mick Wilkes) and St Barbara (David Moroney) will retire from the respective Boards at the completion of the Scheme. Genesis Managing Director Raleigh Finlayson will be Managing Director and Chief Executive Officer, Morgan Ball will be Chief Financial Officer, Troy Irvin will be Corporate Development Officer and Sarah Standish will be General Counsel and Company Secretary. Board and management will own ~A$24 million of the combined equity10. Executive remuneration will be structured to deliver strong alignment with shareholders via high risked performance-based incentives and growth driven key performance thresholds
Contact:
Chris Maitland
Head of Investor Relations
St Barbara Limited
T: +61 3 8660 1914
E: chris.maitland@stbarbara.com.au
Troy Irvin
Corporate Development Officer
Genesis Minerals Limited
T: +61 8 9323 9050
E: investorrelations@genesisminerals.com.au
Forward looking statements
Some statements in this announcement regarding estimates or future events are forward-looking statements. They include indications of, and guidance on, future matters. Forward-looking statements include, but are not limited to, statements preceded by words such as 'planned', 'expected', 'projected', 'estimated', 'may', 'scheduled', 'intends', 'anticipates', 'believes', 'potential', 'could', 'nominal', 'conceptual' and similar expressions. Forward-looking statements, opinions and estimates included in this announcement are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements are provided as a general guide only and should not be relied on as a guarantee of future performance. Forward-looking statements may be affected by a range of variables that could cause actual results to differ from estimated results and may cause St Barbara or Genesis' actual performance and financial results in future periods to materially differ from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include but are not limited to liabilities inherent in mine development and production, geological, mining and processing technical problems, the inability to obtain any additional mine licenses, permits and other regulatory approvals required in connection with mining and third party processing operations, competition for among other things, capital, acquisition of reserves, undeveloped lands and skilled personnel, incorrect assessments of the value of acquisitions, changes in commodity prices and exchange rate, currency and interest fluctuations, various events which could disrupt operations and/or the transportation of mineral products, including labour stoppages and severe weather conditions, the demand for and availability of transportation services, the ability to secure adequate financing and management's ability to anticipate and manage the foregoing factors and risks. These and other factors should be considered carefully and readers should not place undue reliance on such forwardlooking information. There can be no assurance that forward-looking statements will prove to be correct.
GENESIS MINERALS LIMITED 
