Vancouver’s junior mining sector was abuzz with merger and acquisition activity Monday morning while gold prices edged upward on the Toronto Stock Exchange.
First, Vancouver-based Ventana Gold (TSX:VEN) reached an oral agreement with Brazil’s EBX Group to be bought for $13.06 per share in cash.
The deal follows nearly three months of tense negotiations that have seen Ventana previously advise shareholders to reject the offer and try to adopt a poison pill strategy to thwart the takeover.
EBX, which is owned by Eike Batista, Brazil’s wealthiest man, originally valued Ventana at $12.63 per share (see "Ventana battles Brazilian billionaire’s bid for La Bodega" – BIV Business Today, December 23, 2010 http://www.bivinteractive.com/index.php?option=com_content&task=view&id=3556&Itemid=32 .)
The target of the acquisition is Ventana’s flagship La Bodega project in Colombia, which is estimated to hold some 3.5 million ounces of gold, 19.2 million ounces of silver and 84.6 million pounds of copper.
The new deal represents a 30.2% premium to the closing price of Ventana’s shares on November 16, 2010, the last trading day before EBX launched its original hostile takeover.
The company’s shares were up 4.8% to $12.87 following the news.
Meanwhile, Russian mining giant OAO Severstal (LSE:SVST) terminated an agreement to buy Vancouver-based Sacre-Coeur Minerals (TSX-V:SCM).
Severstal already owns 19.67% of Sacre-Coeur, which is focused on gold exploration in Guyana.
Neither Severstal nor Sacre-Coeur explained why the agreement was terminated, though Sacre-Coeur’s chairman Irwin Olian expressed disappointment in a company news release.
"This short-term disappointment may actually prove to be a blessing in disguise as we work to build significant shareholder value," Olian said.
Sacre-Coeur’s shares climbed 9% to $0.60 in midday trades Monday.
At press time, gold prices were up US$2.30 to US$1,362.70 per ounce.