In a bid to continue dominance in the Canadian mining market, Goldcorp Inc. has agreed to buy junior mining company Probe Mines Ltd. in an all-shares deal valued at about $440 million. The mega deal will assist the Vancouver-based company in expanding its presence in one of its core districts in Northern Ontario.
"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 a statement.
Per the deal, the gold miner is offering Probe investors 0.1755 shares for each share they own. The offer of about $4.04 per share is 49 percent more than Probe’s closing price on Friday. In addition to Goldcorp shares, shareholders of Probe will be entitled to an interest in a new exploration company called New Probe.
“This transaction is an excellent outcome for Probe shareholders as it provides them with a significant premium that recognizes the value embedded in Borden,” Probe Chairman Jamie Sokalsky said in a statement.
The primary purpose for Goldcorp’s purchase of Probe Mines is the company’s 100 percent owned Borden Gold project. Located near Chapleau in Ontario, the high-quality deposit is in close proximity to Goldcorp’s Porcupine mine which includes the large milling facility at the Dome complex.
The deal will enable Goldcorp to require considerably lesser capital costs and permitting requirements to transport ore to the Porcupine operations.
"In combination with the recently-announced sale of the Wharf mine, this strategic acquisition is the latest example of our commitment to upgrading the quality of Goldcorp's overall asset portfolio," Jeannes said.
The deal has already been approved by the boards of Goldcorp and Probe. The transaction is expected to close by the end of March 2015. If the deal is not completed by the mentioned date, Probe has agreed to pay Goldcorp a termination fee of roughly $14.5 million, under specific circumstances.