Acquisition would create a 450,000 ounce per year gold producer with significant growth potential.
VANCOUVER, Jan. 23, 2018 /CNW/ - Leagold Mining Corporation (TSX:LMC; OTCQX:LMCNF) ("Leagold" or the "Company") is pleased to announce that it intends to make an offer (the "Offer") to acquire all of the issued and outstanding shares (the "BrioShares") of Brio Gold Inc. ("Brio") on or before February 28, 2018. Pursuant to the Offer, holders of Brio Shares will receive 0.922 of a share of Leagold for each Brio Share held, representing an implied price of C$2.80 per Brio Share and total consideration for all of the issued and outstanding Brio Shares of approximately US$264 million, based on the 5-day volume weighted trading price of Leagold shares on the Toronto Stock Exchange (the "TSX").
Leagold CEO Neil Woodyer stated:
"Leagold's growth strategy in Latin America started with the acquisition of the Los Filos mine in Mexico in April 2017 from Goldcorp, and we have a clear objective of building Leagold into a leading, intermediate gold producer in Latin America. This strategy focuses on acquiring operating gold mines and projects nearing construction, post-acquisition asset optimization, and unlocking value.
"The combination with Brio represents a unique opportunity to acquire a portfolio of producing assets with a meaningful growth profile. The all-stock offer results in Brio shareholders owning approximately 42% of the combined company. The combined operations are expected to produce approximately 450,000 ounces in 2018, with the potential for growth to over 700,000 ounces in 2020 at all-in sustaining costs in the mid-$800s1. In addition, this combination reduces overall business risk by having four operating mines in two jurisdictions. We regard both Mexico and Brazil as jurisdictions with considerable future potential for Leagold.
"Leagold is offering a 57% premium to Brio shareholders, which provides full value and is justified based on the currently discounted value of Brio's assets and the expected savings from eliminating most of their corporate costs. We have support from Brio's controlling shareholder Yamana, with 53.6% of Brio, and several large Leagold shareholders who in the aggregate hold approximately 57% of the company."