By Judy McKinnon
Goldcorp Inc. said Monday it has agreed to buy junior mining
company Probe Mines Ltd. in a friendly, all-stock deal valued at
about 526 million Canadian dollars (US$440 million), expanding the
Vancouver company's 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.
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.
In an interview last week, Goldcorp Chairman Ian Telfer said the
company is constantly looking for mergers and acquisitions. Unlike
many other industries, mining companies need to grow through
acquisitions because their assets are constantly being depleted and
gold mines in particular tend to have shorter lives than other
types of mines. Companies the size of Goldcorp can't rely on
exploration to replace all their assets; larger mining concerns
have a patchy record with exploration.
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. Mr.
Telfer said last week the company would look for acquisitions
outside North America, where 70% of its assets are. South Africa
and Australia present opportunities, he said.
Goldcorp, which already owns a 9.3% 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 deal represents a 49% premium to Probe's closing price on
Friday and will result in Goldcorp issuing about 17 million
shares.
Goldcorp said Probe shareholders will also receive a stake in a
new exploration company that will hold its mineral properties in
the Ring of Fire district in northern Ontario, plus C$15 million in
cash and certain other assets currently owned by Probe. Goldcorp
will own about 9.3% of the new company.
"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," Mr. Jeannes said.
Goldcorp agreed last week to sell the Wharf mine in South Dakota
to Coeur Mining Inc. for $105 million. That news came alongside
Goldcorp's warning it would take a fourth-quarter impairment charge
of up to $2.7 billion on its Cerro Negro gold mine in Argentina due
to challenging fiscal conditions in that country.
Alistair MacDonald contributed to this article.
Write to Judy McKinnon at judy.mckinnon@wsj.com
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