Goldcorp (TSX:G) is buying Probe Mines Ltd. in a move that will expand the Vancouver-based company’s presence in Northern Ontario’s gold mining hub.
The all-stock transaction is worth US$440 million, or approximately $526 million Canadian.
The move gives the mining giant control over the Borden Gold project, considered one of the most promising new gold discoveries in Canada, which is located about 160 km. west of Goldcorp’s Porcupine mine in Timmins, Ontario.
“This transaction is consistent with Goldcorp’s long-standing strategy of securing growth opportunities in and around our existing districts with a focus on low-cost, high-quality gold production,” Chuck Jeannes, Goldcorp’s chief executive, said in a statement.
Goldcorp, which already owns a 9.3% stake in Probe Mines, said shareholders of the smaller company would receive 0.1755 of a Goldcorp share in the deal, valuing Probe’s shares at C$5 each.
The deal represents a 49% premium to Probe’s closing price on Friday and will result in Goldcorp issuing about 17 million shares.
Former Barrick Gold CEO Jamie Sokalsky, who is the current chairman of Probe Mines, said the transaction was “an excellent outcome” for the company’s shareholders as it provides them with “a significant premium that recognizes the value embedded in Borden.”
Sokalsky, who left the top role at the world's largest gold producer only four months ago, will continue in its role as chairman and chief executive David Palmer will remains as such as well, but the company will now be known as New Probe and run in partnership with Goldcorp to continue the success of the Probe team.
Jeannes’ firm agreed last week to sell the Wharf mine in South Dakota to Coeur Mining (NYSE: CDE) for $105 million. That announcement came alongside Goldcorp’s notice of an upcoming impairment charge of up to $2.7 billion on its Cerro Negro gold mine in Argentina due to challenging fiscal conditions in that country.
