Vancouver’s Primero Mining Corp. (TSX:P) will nearly double gold production with the acquisition of Halifax-based Brigus Gold Corp. (TSX:BRD).
Primero announced December 16 that it plans to acquire Brigus Gold in an all-share deal worth approximately $220 million.
Brigus shareholders will receive 0.175 Primero shares for each Brigus share, valuing each Brigus share at $0.91 per share, which represents a 43% premium based on the 20-day volume-weighted average share price.
The merger will bring together gold production of Primero’s San Dimas mine in Mexico and Brigus’ Black Fox mine near Timmins, Ontario. Together, both mines will create combined production of between 190,000 and 210,000 ounces of gold based on 2013 estimates.
The merger will also create a producer with a stronger balance sheet with sufficient capital to repay debt while also continuing to fund its existing development projects.
So far this year, despite the drop in the gold price, both companies have remained profitable. For the nine-month period ending September 30, Primero posted net income of US$31.6 million, although that was down from $48.3 million for the same period in 2012. Brigus Gold posted net income of $9.8 million, down from $14.5 million in the same period last year.
Brigus shares were up 35% by midday, trading at $0.85 per share. Primero shares were down 6% to $4.91 per share.
The deal is expected to close in late February 2014, following shareholder approval and closing of customary regulatory and court approvals.
@RichardChu_BIV
