Buyouts and deals in Vancouver’s precious metals sector continue to flow as gold prices soar above $1,200 an ounce.
This morning, Eldorado Gold Corp. (TSX:ELD) cut a friendly $122.4 million deal to buy a Houston-based gold hunter called Brazauro Resources Corp. (TSX-V:BZO).
Brazauro owns the exploration-stage Tocantinzinho project in Brazil’s Tapajos district, which could contain 1.9 million ounces of gold.
The company’s stock catapulted 88.4% to $1.30 in early day trading on the news, while volume reached 14,639,671.
Brazauro chairman and CEO Mark Jones III spoke to BIV from his Houston office, and said he would finally be able to relax knowing the future of his gold project is secure.
Jones said: “It’s a good day. I know one thing: it’s going to be a restful day for a change. I won’t have to go to sleep with my eyes open for a time.”
The deal represents a 92% premium to the May 11 closing price of Brazauro shares. Vancouver-based Eldorado has agreed to fund $10 million for a new exploration company. The company would contain some assets that Brazauro already owns. The takeover deal is expected to close July 15.
Eldorado has been interested in the project for a while, and in the summer of 2008 signed an option agreement with Brazauro where Eldorado could earn up to 75% of the asset for $123 million in expenditures and cash payments.
James said today’s buyout is a better deal for both companies. He estimated that Tocantinzinho could cost US$240 million to build.
Eldorado’s share price during the past week: between $16.85 and $18.31; 52-week high: $18.24; 52-week low: $8.83.