We read the consolidation of Genesis and St Barbara as a positive transaction for Genesis shareholders. Assuming both the SBM and DCN transactions finalise, we think Genesis would be in a better position than with the Dacian transaction alone. With many moving parts and transaction completions dependent on numerous conditions and approvals, we’re hesitant to update our valuation assumptions at this time. We therefore retain our previous valuation, which improves slightly after factoring in cash difference and our updated long term AUD:USD exchange rate, as a ‘valuation floor’ of $1.73 per share (prior $1.70). We continue to recommend the stock as a speculative buy. Key risk remains the finalisation of both transactions. Expected completion date for the GMD/SBM consolidation is May 2023, we will continue to monitor and will update our valuation/recommendation as required.
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