Investors will get 0.21 of a Keegan share for each PMI share, the Vancouver-based companies said today in a statement. The new company will be called Asanko Gold Inc. Keegan’s offer represents an 11 percent premium, based on the companies’ closing share prices yesterday.
The combined company will have about $340 million in cash and two Ghanaian mines within 15 kilometers (9 miles) of each other. PMI’s Obotan project is expected to produce about 200,000 ounces annually starting in 2014 and Keegan’s Esaase will produce 150,000 to 200,000 ounces by 2017.
“We expect significant synergies through the joint development of Obotan and Esaase,” Keegan Chief Executive Officer Peter Breese said in the statement. Breese will be CEO of the new company and PMI CEO Collin Ellison will become president.
Keegan declined 4.4 percent to C$3.74 at 9:34 a.m. in Toronto. PMI gained 8.1 percent to 80 Canadian cents, the biggest intraday increase since Aug. 28. The shares had dropped 21 percent this year through yesterday.
Keegan’s financial adviser on the deal is Canaccord Genuity and its legal adviser is McMillan LLP. PMI is being advised by Macquarie Capital Markets Canada Ltd. and Stikeman Elliott LLP.
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