Goldcorp will acquire Probe Mines Ltd. in a friendly, all-stock deal valued at $440 million.
The Wall Street Journal reported that the deal will help Goldcorp expand its presence in Northern Ontario through the acquisition of the Borden Gold project.
“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.
Toronto-based Probe Mines’ key asset is the Borden Gold project, a deposit minable through conventional underground methods and located west of Goldcorp’s Porcupine Mine in Timmins, Ontario. Analysts said that Goldcorp had paid a full premium for Probe but that there should be synergies with the Vancouver company’s nearby Porcupine Mine.
Goldcorp tried and failed to take over Quebec-based gold miner Osisko Mining Corp last April, leaving investors to assume further M&A activity.
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, which already owns a 9.3 percent stake in Probe Mines, said shareholders of the smaller company will receive 0.1755 of a Goldcorp share in the deal, valuing Probe’s shares at C$5 each.
The chairman of Probe Mines is Jamie Sokalsky, the former chief executive of Barrick Gold Corp.
The deal represents a 49 percent premium to Probe’s closing price Friday and will result in Goldcorp issuing about 17 million shares. Such a premium underscores how mining companies are willing to pay extra for assets in safe political jurisdictions like Canada, after problems in developing countries from Argentina to Zambia.