VANCOUVER (miningweekly.com) – The shareholders of both Leagold Mining and Brio Gold have voted in favour of a friendly $264-million all-scrip offer by Leagold to acquire Brio.
Brio now intends to seek a final order approving the transaction from the Ontario Superior Court of Justice by next Tuesday. Assuming all other customary terms and conditions to the transaction are met and certain Mexican regulatory approvals are obtained, the arrangement is expected to close in May.
Leagold is making good on its promise to use the April 2017 acquisition of the Los Filos mine, in Mexico, as a platform from which to grow its production base through mergers and acquisitions focused on Latin America, drawing on the management team's proven experience in turning around marginal operations.
Under the terms of the deal, Brio shareholders will receive 0.922 of a Leagold share for each share held, at an implied price of C$2.80 per Brio share – a premium of 57% based on both companies' five-day weighted average share prices on the TSX at market close on January 24, when the deal was first announced.
"We are very pleased with the overwhelming support for this transaction by Leagold and Brio shareholders. The acquisition of Brio advances our strategy to create an intermediate Latin American gold producer. With four operating mines and two development projects in Mexico and Brazil, the combined operations have the potential to produce over 700 000 oz of gold by 2020; this gives Leagold a strong platform for further growth within Latin America,” CEO Neil Woodyer stated.
Brio has been focusing on containing costs and increasing its cash flow to offset production challenges and has invested in the Riacho dos Machados expansion, in Minas Gerais, and Santa Luz, in Bahia – both in Brazil – which are poised to lift the run rate to a range of 350 000 oz to 400 000 oz of gold in 2019.
Yamana Gold had in December completed the spin-out of Brio, forming a standalone public company focused on a portfolio of noncore Yamana assets in Latin America and Canada as it honed operations at its core assets. The transferred assets included Fazenda Brasileiro, Pilar and C1 Santa Luz, as well as some related exploration concessions.