Monsters of Rock: Raleigh Finlayson's Genesis bats away takeover speculation

Raleigh Finlayson’s Genesis Minerals has knocked back speculation it is plotting a merger with fellow WA gold stock St Barbara
Focus has been placed on consolidation around the Leonora gold province for a number of years due to resource concerns at St Barbara’s historic Gwalia gold mine
Regis Resources adds ounces at Duketon and Tropicana, but falls well short of depletion after 2021 drilling

Ever since former Saracen and Northern Star Resources (ASX:NST) boss Raleigh Finlayson made his triumphant return from a year gracing the halls of Harvard University speculation as to how quickly he would wield his mighty influence at new venture Genesis Minerals (ASX:GMD) has circulated widely.

The junior explorer has been around for years, crafting a quiet space for itself by drilling and briefly mining some gold rich dirt out near Leonora and Menzies in the WA Goldfields, not far from Jeedamya Station where Finlayson happened to have been raised.

Genesis for years built a tidy if inconspicuous gold operation and resource out at the Ulysses mine on the Goldfields Highway, a source of the precious metal that always looked pretty tasty to the Gwalia gold mine owner St Barbara (ASX:SBM).

Finlayson’s emergence at Genesis, which has subsequently buffed its resource base up from 1.6Moz to 2Moz, inspired a run in the company’s share price (+122% in the past 12 months) that threatens to propel the early stage explorer into the gold mid-tier.

Barring a major new discovery in a well-tested part of the West Australian outback, the drill bit can only go so far.

With Finlayson’s ambition of bridging the $5 billion gap between the junior gold sector and the Australian market’s big three of Newcrest (ASX:NCM), Northern Star and Evolution (ASX:EVN) well articulated there is plenty of talk within the market that he’s after a Big Kahuna.

The latest is some speculation from the AFR that a merger or takeover from St Barbara, trying to add ounces to its Leonora province around its ancient Gwalia mine, could be in the works.

Genesis emerged from a brief trading halt today to say, ‘no dice’.

“Genesis Minerals Limited refers to media speculation regarding business development discussions, including in today’s Australian Financial Review Street Talk “St Barbara, Genesis Minerals talks flare up”,” the company said.

“Genesis advises that it has reviewed a number of business development opportunities in the Leonora region of Western Australia, including merger and acquisition discussions with St Barbara Limited.

“No agreements have been concluded with any of these opportunities and there are no current discussions with St Barbara.”

St Barbs locked up Bardoc Gold last year in a deal brought on by the junior’s decision to dump plans to develop its Aphrodite and Bardoc gold mines near Kalgoorlie due to inflation. It was unsuccessful in a previous effort to buy up Kin Mining (ASX:KIN) after major shareholders at the target bristled.

Genesis Minerals (ASX:GMD) and St Barbara (ASX:SBM) share prices today:

Regis struggles to add ounces

Regis Resources (ASX:RRL) is trading at a fraction of what it was during the gold boom a couple years ago, with the $1.5 billion struggling to make production growth and its $900 million purchase of a 30% stake in the Tropicana gold mine last year really sing for investors.

It has been struggling in recent times to add substantial ounces to its primary Duketon operations, but still has a decent runway ahead of it.

Regis says drilling last year added 150,000oz of resources and 140,000oz of reserves, but that didn’t keep pace with depletion and updates to mining models, which knocked 490,000oz and 340,000oz out of its inventory.

That said, at 4.14Moz of reserves and 9.92Moz of resources Regis still has around 9 years of mining ahead of it on reserves and around 17-18 years on resources according to analysts at RBC, not too unhealthy a position to be in if gold prices bounce.

Regis however says drill results at Tropicana and its underground Boston Shaker mine are providing confidence for a 10-plus year mine life at the majority AngloGold Ashanti owned operation, while it is outpacing depletion its its key Rosemont and Garden Well underground deposits at Duketon, where production has been transitioning from open cut to underground in recent years.

“We have a portfolio of long-life assets that are all in the Tier 1 location of Australia. Our Reserves underpin a Reserve life of more than 9 years and provide a strong platform for the company’s ongoing growth,” RRL MD Jim Beyer said.

“Our Ore Reserves are estimated at one of the lowest gold price assumptions in the industry thereby continuing to position the business to be resilient through the cycles.

“Duketon underground reserves growth continues to outpace depletion and regional exploration works continue to identify early stage, but exciting intercepts, in close proximity to our existing mills.”