Vancouver's Red Back Mining Inc. (TSX:RBI) plans to merge with Perth, Australia-based Moto Goldmines Ltd. (TSX:MGL) in an all-share deal worth approximately $513 million.
The merger combines the African mining projects of both companies under one roof. Those projects include Red Back's Tasiast Mine in Mauritania, the Chirano mine in Ghana and Moto Gold's Moto project in the Democratic Republic of Congo.
The merger will help bring the Moto mine into production, which is expected to increase Red Back's gold output to more than a million ounces per year.
The deal will see Red Back buy Moto's shares at 0.45 Red Back share for each Moto share, which represents a 40% premium over Moto's 20-day volume-weighted average share price. Following the closing of the deal, Moto shareholders will own about 17.7% of Red Back's outstanding shares.
The deal, which is subject to customary closing conditions and regulatory and shareholder approvals, is expected to close in August 2009.
Red Back's share price range during the past week: between $10.37 and $10.60; 52-week high: $11.19; 52-week low: $3.28.