Primero Mining Corp. (P), the operator of the San Dimas gold mine in Mexico, agreed to buy Canada’s Brigus Gold Corp. (BRD) for about C$220 million ($208 million) in stock to expand its production of the precious metal.
Investors will get 0.175 of a Primero share for each Brigus share they hold, Vancouver-based Primero said today in a statement. The offer is valued at C$0.91 per Brigus share, based on Primero’s Dec. 13 closing price in Toronto, and is 45 percent more than Halifax-based Brigus’s closing price.
As part of the deal, Primero will spin out a company with Brigus’s interests in mining projects in Saskatchewan and Mexico. The new company will be 90 percent-owned by Brigus shareholders with Primero investors holding the rest.
Brigus operates the Black Fox gold mine in Ontario. Primero said it has the resources necessary to develop Brigus’s adjacent Grey Fox project. Following the takeover, Primero is expected “to appeal to a broader shareholder base, increase analyst coverage and improve share trading liquidity,” it said.
Shares of Primero dropped 6.7 percent to C$4.87 at the close in Toronto while Brigus rose 33 percent to 84 cents, its biggest gain since going public.
Primero’s financial adviser is BMO Capital Markets and its legal adviser is Stikeman Elliott LLP, while its board of directors hired Scotiabank as an adviser and to provide a fairness opinion.
Brigus’s financial advisers are Primary Capital Inc. and Cormark Securities Inc. and its legal adviser is Fogler, Rubinoff LLP. Fasken Martineau DuMoulin LLP is legal counsel to the special committee of Brigus’ board of directors.
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