Fresnillo PLC (LSE:FRES) shares rose in early trading after the precious metals miner announced a C$780 million (£724 million) all-cash deal to buy Canada’s Probe Gold Inc (TSX-V:PRB), marking its first move into the country’s mining sector.
The FTSE 100-listed group will pay C$3.65 a share, a 24% premium to Probe’s 30-day average price on the Toronto exchange.
The deal gives Mexico-focused Fresnillo ownership of the Novador and Detour gold projects in Quebec, adding about 10 million ounces of resources, including 8 million ounces at the flagship Novador site.
Novador is expected to produce more than 200,000 ounces of gold a year over at least a decade, offering Fresnillo a sizeable foothold in one of the world’s most established gold regions.
The move also broadens the company’s geographic footprint beyond Mexico, where it operates several of Latin America’s largest precious-metal mines.
Chief executive Octavio Alvídrez said the acquisition was a “disciplined, value-driven” expansion into a “world-class mining jurisdiction” that fits Fresnillo’s strategy of pursuing early-stage, high-quality projects.
He added that the company would build on Probe’s existing work to advance development at Novador once the deal closes.
Broker Peel Hunt noted that the announcement "provides no economics" on the development of Novador.
"However, in our view, management is seeking to address concerns around the lack of material growth within the portfolio and may also be signalling challenges in advancing the group’s existing exploration and development projects.
"We require additional details to assess whether this transaction will create value for shareholders."
The shares rose 1.3% to 2,278p