Goldcorp to buy Probe Mines for about US$440 million
[TORONTO] Goldcorp Inc said on Monday it has agreed to buy Probe Mines Ltd in an all-stock deal that values the metals exploration company at C$526 million (US$439 million), in a bid to win control of the Borden Gold project in northern Ontario.
The project, located some 200 km (125 miles) southwest of the gold mining hub of Timmins, Ontario, is viewed as one of the most promising new gold discoveries in Canada.
Probe's Chief Executive David Palmer is set to receive an award at this year's Prospectors & Developers Association of Canada convention in March for the discovery that boasts some two million ounces of relatively high-grade gold resources.
The deal also puts another feather in the cap of Barrick Gold veteran Jamie Sokalsky who just four months ago stepped in as chairman of Probe after having stepped down as CEO of the world's largest gold producer.
"We believe this transaction is an excellent outcome for Probe shareholders as it provides them with a significant premium that recognizes the value embedded in Borden," said Mr Sokalsky in a statement.
The transaction, set to close in March, values each Probe share at C$5, a 49 per cent premium to Friday's closing price. Probe shares surged 50 per cent on the TSX Venture Exchange on Monday.
"This transaction is consistent with Goldcorp's longstanding strategy of securing growth opportunities in and around our existing districts with a focus on low-cost, high-quality gold production," said Goldcorp CEO Chuck Jeannes in a statement.
Borden is located some 160 km west of Goldcorp's Porcupine mine that has been in operation for over a century.
Goldcorp said transporting ore to Porcupine would greatly reduce capital costs and permitting requirements compared to a stand-alone development. It would also put the miner in a position to deliver higher-grade ore to Porcupine within a relatively short development period.
In a note to clients, Cormark analyst Tyron Breytenbach said he does not expect rival bids for Probe, but sees its rivals like Romarco, Kaminak, Premier Gold and Pretium possibly attracting interest from large miners.
"While there are many producers who could use a large high grade resource in a new district scale Canadian camp, there are few capable of topping Goldcorp's offer in our opinion," he said.
BMO Capital Markets acted as Probe's financial advisor on the deal, while Goldcorp was advised by GMP Securities.
REUTERS
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Energy & Commodities
Gold edges down as Middle East worries ebb
Oil rises as dollar slips, focus shifts to economic data
California to wrap up ExxonMobil plastics probe ‘in weeks’, AG says
Gold edges higher; hovers near one-week low on tempered Middle East fears
Why has gold’s inverse relationship with the US dollar reversed?
Oil futures fall as fears of a wider Middle East war fade