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The enlarged Primero would produce the equivalent of 250,000 to 270,000 ounces of gold next year from two producing mines and has the potential to produce 400,000 gold-equivalent ounces by 2017. (Ajay Verma/Reuters)
The enlarged Primero would produce the equivalent of 250,000 to 270,000 ounces of gold next year from two producing mines and has the potential to produce 400,000 gold-equivalent ounces by 2017. (Ajay Verma/Reuters)

Primero Mining acquires Brigus Gold in $220-million all-stock deal Add to ...

Primero Mining Corp. is preparing to acquire Brigus Gold Corp. in a friendly all-stock deal valued at about $220-million (U.S.).

The enlarged Primero would produce the equivalent of 250,000 to 270,000 ounces of gold by next year from two producing mines.

It also has the potential to produce 400,000 gold-equivalent ounces by 2017.

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“This acquisition is immediately accretive to our production and cash flow,” Joseph Conway, Primero’s chief executive, said in a statement.

“It also diversifies Primero geographically, into a very prospective and proven mining jurisdiction that our team is excited to operate in.”

Brigus chief executive Wade Dawe said the deal gave the company access to Primero’s strong balance sheet and cash flow, enabling it to move ahead with its Black Fox mine as well as its Grey Fox project.

“The combined company will also benefit from improved market liquidity and Primero’s proven management team with a demonstrated track record of successfully growing precious metals mining companies,” Dawe said.

The deal values Brigus shares at 91 cents each — a 45-per-cent premium to the market price — based on the Primero’s closing price of $5.22 on the Toronto Stock Exchange on Friday.

Brigus shareholders would own about 26.6 per cent of Primero’s equity after the transaction and 90.1 per cent of a new company that will be spun off with some Brigus assets.

The companies haven’t assigned a value to the newly incorporated company, or SpinCo.

Under the deal, each outstanding Brigus common will be exchanged for 0.175 of a Primero common share and 0.1 of a common share of the new company.

All outstanding options to purchase Brigus common shares will be exchanged for options to purchase Primero and SpinCo shares at the same ratios as the stock exchange.

SpinCo will hold Brigus’s interests in the Goldfields project in Saskatchewan and the Ixhuatan and Huizopa projects in Mexico and will be capitalized with approximately $10-million (Canadian) in cash.

 
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