Canadian miner Goldcorp adds capacity

January 19, 2015 08:53 AM

Goldcorp Inc., the biggest gold producer by market value, agreed to buy Probe Mines Ltd. for about C$526 million ($440 million) in shares to add an Ontario deposit that will expand its Porcupine operation in the Canadian province.

Goldcorp is offering Probe shareholders 0.1755 shares for each share of Probe, the Vancouver-based company said today in a statement. The offer of about C$5 per share is 49% higher than Probe’s closing price on Friday.

Goldcorp, which operates mines in the Americas, is among producers seeking to reduce costs and focus on the most profitable operations after gold prices fell for a second consecutive year. Vancouver-based Goldcorp said it can operate Probe’s Borden project more cheaply by processing ore at its nearby Porcupine mine.

“This strategic acquisition is the latest example of our commitment to upgrading the quality of Goldcorp’s overall asset portfolio,” Goldcorp Chief Executive Officer Chuck Jeannes said in the statement.

The Probe acquisition has been approved by both companies’ boards and is expected to close in late March, subject to approvals including by two-thirds of Probe’s shareholders. Probe last year appointed former Barrick Gold Corp. CEO Jamie Sokalsky as its chairman.

The purchase is Goldcorp’s first since the company tried to buy another Canadian producer, Osisko Mining Corp., in an ultimately unsuccessful unsolicited bid announced almost exactly a year ago. Goldcorp terminated its C$3.26 billion bid for Osisko in April after Canadian rivals Yamana Gold Inc. and Agnico Eagle Mines Ltd. reached a friendly takeover deal.

In addition to Goldcorp shares, Probe shareholders will also get one third of a share in a new exploration company that will hold some of Toronto-based Probe’s earlier-stage properties in Northern Ontario. Goldcorp, which already owns 9.3% of Probe, will hold about 9.3% of the new company.

Goldcorp was advised by GMP Securities LP and its legal adviser is Cassels Brock & Blackwell LLP in Canada. Probe is being advised by BMO Capital Markets and Stikeman Elliott LLP is its legal adviser.

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