Vancouver-based B2Gold Corp. (TSX:BTO) and Australia's CGA Mining Ltd. (TSX:CGA) have entered into a merger agreement to combine the two companies in a transaction valued at approximately $1.1 billion.
The gold miners have agreed on an exchange ratio of 0.74 B2Gold common shares for each CGA share held, which represents a purchase price of approximately C$3.18 per CGA share and a premium of 22% using the 20-day volume weighted average share price of each respective company.
The combination of B2Gold and CGA will result in a merged entity operating the Masbate gold mine in the Philippines, in addition to B2Gold's existing Limon and La Libertad gold mines in Nicaragua.
The Masbate gold project, previously under the purview of CGA, is the largest operating mine in the Philippines and is set to produce around 200,000 ounces of gold over the 12-month period ending June 30, 2013.
In a joint statement, the two companies said B2Gold is well positioned to operate and progress further development at Masbate given its strong funding capacity and a management team with significant exploration, mine development and operating experience.
Clive Johnson, president and CEO of B2Gold, said, "We believe CGA and its flagship Masbate mine offers B2Gold shareholders immediate leverage to a significantly larger combined production profile.
"With this transaction, B2Gold has taken a major step towards cementing itself as a leading gold sector consolidator, providing for geographic and operational diversity while contributing significant cash and future cash flow towards B2Gold's exciting development projects."
Michael Carrick, president and CEO of CGA, said, "With this transaction, CGA shareholders will have the opportunity to incorporate with a management team who have a demonstrated track record of success and value creation. B2Gold has a remarkable development profile ahead, and Masbate will play a key role in bringing those projects to fruition."
At press time, shares in B2Gold were trading down $0.38, or 8.84%, at $3.92.
