In today’s briefing:
- Genesis Minerals (GMD AU) And St Barbara (SBM AU) Merger
- St Barbara’s Reverse Merger Of Genesis
- Dongkuk Steel Mill: Demerger Details & Passive Outflow Trading
- Newmont Corporation: Initiation of Coverage – Macro For Gold Mining & Other Drivers
- The Commodity Report #81
- Newmont Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report
Genesis Minerals (GMD AU) And St Barbara (SBM AU) Merger
- St Barbara Ltd (SBM AU) and Genesis Minerals (GMD AU) will merge via a scheme at a gross exchange ratio of 2.0338 SBM shares per GMD share.
- The deal metrics are favourable for GMD shareholders. The gross exchange ratio is attractive and values GMD at a slight premium to mid-cap ASX peers on an EV/Resource basis.
- The likely pushback from SMB shareholders is that the terms were struck from a position of share price weakness. However, the low SMB shareholder voting threshold (50%) will help.
St Barbara’s Reverse Merger Of Genesis
- Gold miners St Barbara Ltd (SBM AU) and Genesis Minerals (GMD AU) have agreed to merge via a Scheme. Inter-conditionally, SBM will demerge Atlantic, Simberi, and other assets.
- SBM will issue 2.0338 of its own shares for each GMD share. Conditional on the Scheme and asset demerger, Genesis will raise $275m to fund the merged entity.
- At completion, SBM shareholders will hold 38% in the combined group, current Genesis shareholders 41%, with the remaining 22% held by participants in the capital raising.
Dongkuk Steel Mill: Demerger Details & Passive Outflow Trading
- The size of treasury shares in the Dongkuk Steel demerger event is not too large to expect a value accretion to the combined market cap after the split.
- Based on the current market cap, all three companies will likely leave the KOSPI 200. To this end, K200 trackers must dispose of Dongkuk Steel right before the trade suspension.
- The size of rebalancing trading before trade suspension should be about ₩40T. We should consider setting our entry into flow trading as early as two weeks towards the trade suspension.
Newmont Corporation: Initiation of Coverage – Macro For Gold Mining & Other Drivers
- This is our first report on global gold mining giant, Newmont Corporation.
- In Q3, they produced 1.5 million ounces of gold and nearly 300,000 gold equivalent ounces from copper, silver, lead, and zinc.
- We initiate coverage on the stock of Newmont Corporation with a ‘Hold’ rating.
The Commodity Report #81
- The Federal Reserve has done a spectacular job of keeping inflation expectations “anchored” in this market, despite multi-decade high levels of inflation.
- From the perspective of the Federal Reserve, it’s important to have well-anchored inflation expectations because this can help to keep actual inflation close to the central bank’s target rate.
- When inflation expectations are well-anchored, households and businesses are more likely to base their decisions on the assumption that inflation will remain stable and close to the target rate.
Newmont Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report
- Newmont Corporation is among the global leaders in the exploration and production of gold.
- They are also stepping up development operations in Subika Underground and achieved record production drill meters while advancing the mine’s third production level’s development.
- The arrival of a second underground production drill might help deliver the fourth quarter’s anticipated development and the ensuing ore tonnes in 2023.
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