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Asanko Gold to Buy PMI for $173 Million

Dec. 17 (Bloomberg) -- Asanko Gold Inc., a Canadian exploration company focused on West Africa, agreed to buy PMI Gold Corp. for about C$183 million ($173 million) to target 400,000 ounces of annual output of the precious metal by 2017.

Investors will get 0.21 of an Asanko share for each PMI share, Asanko said today in a statement. The offer is valued at C$0.44 per PMI share and is 58 percent more than Vancouver-based PMI’s closing price yesterday. Asanko will issue 86.9 million shares as part of the deal.

PMI rose 45 percent to C$0.41 while Asanko fell 2.9 percent to C$2.04 in Toronto.

In February, a C$339 million bid for PMI by Asanko -- then known as Keegan Resources Inc. -- was terminated for lack of shareholder support. The deal announced today is the second involving Canadian gold explorers this week, after Primero Mining Corp. agreed to buy Brigus Gold Corp. yesterday for about C$220 million.

Asanko said the combination of its Esaase gold project and PMI’s neighboring Obotan projects in Ghana will have a combined 7.5 million ounces of measured and indicated gold resources. The merged company will have $280 million in cash and a $150 million debt facility arranged, according to the statement.

The company will be managed by the existing Asanko executive team, led by Peter Breese as president and chief executive officer. PMI shareholders with about 20 percent of stock and Asanko holders with about 9.6 percent have already backed the deal.

Asanko’s financial advisers are Canaccord Genuity Group Inc. and Azure Capital Ltd. while McMillan LLP and Hardy Bowen are its legal advisers. PMI’s financial adviser is Macquarie Group Ltd. with Stikeman Elliott LLP as legal adviser.

The equity value of the deal is based the 414 million PMI shares that were outstanding as of Nov. 29, according to data compiled by Bloomberg.

To contact the reporter on this story: Stephen Cunningham in New York at scunningha10@bloomberg.net

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