Goldcorp Inc. (GG) announced that it has inked a deal to buy all the outstanding shares of Probe Mines Limited for a total consideration of around C$526 million (roughly $440 million).
As per the deal, each share of Probe will be exchanged for 0.1755 common shares of Goldcorp. Based on last Friday's closing price of Goldcorp's shares on the Toronto Stock Exchange (TSX), the deal values each Probe share at C$5.00. The consideration received by Probe shareholders represents a 49% premium to the closing price of Probe on last Friday.
In addition to the Goldcorp shares, shareholders of Probe will be entitled to an interest in a new exploration company called New Probe which will have Probe's mineral properties in the Ring of Fire in Northern Ontario, as well as C$15 million in cash and specific other assets currently owned by Probe. Once the deal is complete, Goldcorp will own about 9.3% of New Probe and will support New Probe in the execution of its business plan.
The primary asset of Probe is a 100%-owned Borden Gold project located near Chapleau in Ontario, about 160 kilometers west of Goldcorp's Porcupine mine. Borden mine is a high-quality deposit and is mineable through the traditional underground mining methods.
Goldcorp, which is among the prominent gold mining companies along with Barrick Gold (ABX), Newmont (NEM) and Kinross Gold (KGC), has the advantage of adding Borden to its asset portfolio due to its proximity to the Porcupine operation, which includes the large milling facility at the Dome complex.
The company will require considerably lesser capital costs and permitting requirements to transport ore to the Porcupine operation. The transaction is in sync with Goldcorp’s strategy of upgrading the quality of its overall asset portfolio.
The deal has been approved by the boards of Goldcorp and Probe and will be subject, among other things, to the favorable vote of 66 2/3% of the Probe common shares voted at a special shareholder meeting called to clear the transaction. The transaction is expected to close by the end of Mar 2015, and in case it is not completed, Probe has agreed to pay Goldcorp a termination fee of C$18.4 million, under specific circumstances.
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