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Goldcorp to acquire Probe Mines for C$526 mln to expand Ontario assets

Last updated: 13:04 19 Jan 2015 GMT, First published: 14:04 19 Jan 2015 GMT

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Goldcorp (TSE:G), Canada’s largest gold miner by market value, said it has agreed to buy full control of Probe Mines (CVE:PRB), a metals exploration company, for C$526 million in an all-stock deal to add an Ontario deposit that will expand its Porcupine operation in the Canadian province.

Goldcorp is offering Toronto-based Probe shareholders 0.1755 shares for each share of Probe, the Vancouver, British Columbia-based company said in a statement today. The offer of about C$5 per share is 49 percent higher than Probe’s closing price of C$3.36 on January 16. Goldcorp already owns a 9.3 percent stake in Probe.

In addition, shareholders of Probe will receive shares in a newly formed company, New Probe, which will be listed on the TSX Venture Exchange. Goldcorp will own 9.3 percent of New Probe.

Probe's Borden Gold project, located some 200 kilometeres southwest of the gold mining hub of Timmins, Ontario, is viewed as one of the most promising new gold discoveries in Canada.

Borden is also located some 160 kilometres west of Goldcorp's Porcupine mine, which has been in continuous operation for over 100 years.

Goldcorp said transporting ore to Porcupine would greatly reduce capital costs and permitting requirements compared to a stand-alone development. It would also put Goldcorp in a position to deliver higher-grade ore to Porcupine within a relatively short development period. 

“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 the statement. 

The transaction, which is expected to close in March, requires a two-thirds majority vote from Probe shareholders at a special meeting. Goldcorp would receive a C$18.4 million termination fee under certain circumstances if the deal doesn’t close.

Probe’s board of directors are supporting the deal and shareholders representing 4.6 percent of Probe’s outstanding stock have agreed to tender to the offer.

Goldcorp is seen as being the most likely to buy assets among gold-mining majors, given a balance sheet that is comparatively debt free and a share price that has outperformed the sector.

Goldcorp agreed last week to sell its Wharf mine in South Dakota to Coeur Mining for $105 million. That news came alongside Goldcorp’s warning it would take a fourth-quarter impairment charge of up to $2.7 billion on its Cerro Negro gold mine in Argentina due to challenging fiscal conditions in that country.

Shares of Goldcorp closed up 4.8 percent at $28.49 on January 16, expanding this year’s rally to 32 percent.

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