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Goldcorp's Porcupine mine in northern Ontario. The company purchased Probe Mines Ltd. Monday and plans to transport ore from Probe’s Borden Gold project to Porcupine in order to cut costs.Handout

Goldcorp Inc. is set to buy Probe Mines Ltd., a company chaired by former Barrick Gold Corp.'s chief executive for about $526-million, for its gold property in northern Ontario.

The transaction is the first deal for Jamie Sokalsky, who left Barrick as CEO in a management shakeup and became the chairman of Probe in the fall.

This is also the first acquisition for Goldcorp, the world's largest gold miner by market capitalization, since it failed to acquire Osisko's massive mine in Quebec a year ago.

Goldcorp started talking to Probe last year as it accumulated a 9.3 per cent stake in the junior miner, according to sources. But the talks only became serious after Mr. Sokalsky consolidated the land around Probe's Borden gold property last year, the sources said.

The announcement comes a week after Goldcorp announced the sale of its South Dakota mine, in an effort to focus on its better performing mines.

The three-year slump in commodity prices has prompted Goldcorp and other mining companies to improve their portfolios and ditch non-core assets.

"In combination with the recently-announced sale... this strategic acquisition is the latest example of our commitment to upgrading the quality of Goldcorp's overall asset portfolio," Goldcorp's chief executive Chuck Jeannes said in a statement.

The acquisition would give Vancouver-based Goldcorp a mineral deposit close to its Porcupine mine in Timmins, Ont. and allow the miner to transport ore from Borden to its existing mills.

Goldcorp's all-stock bid is valued at $5 per Probe share, and represents a 49 per cent premium to Probe's stock based on last Friday's closing prices.

The half-a-billion dollar deal comes after a lacklustre year for dealmaking in the Canadian mining sector. Miners had tried to sell assets only to pull them from the market when they could not get the desired price.

As part of the transaction, Probe's shareholders will receive shares in an exploration company, which will house Probe's other mineral properties.

Mr. Sokalsky and Probe's chief executive will remain in their current positions at the smaller exploration company.

The announcement sent Probe's stock up 51 per cent to $5.07 early Monday morning. The transaction is expected to close around late March.

GMP Securities advised Goldcorp and BMO Nesbitt Burns advised Probe.

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