Primero Mining and Brigus Gold entered into an agreement in mid-December whereby Primero will acquire Brigus in an all-share transaction valued at about C$220 million. Each company has a single producing mine. Primero’s San Dimas mine in Durango state, Mexico, produced about 100,000 oz of gold and 5.8 million oz of silver in 2013; Brigus’ Black Fox mine in Ontario, Canada, produced about 100,000 oz of gold in 2013. The companies expect combined total production from the two mines in 2014 to be in the range of 250,000 to 270,000 gold equivalent oz.
The companies’ development projects include Primero’s Cerro del Gallo project in Guanajuato state, Mexico, and Brigus’ Grey Fox project 4 km from its Black Fox mine in Ontario. These projects provide the potential for production from the combined company to grow to about 400,000 gold equivalent oz/y by 2017.
Brigus’ interests in the Goldfields project in Saskatchewan and the Ixhuatán and Huizopa projects in Mexico will be spun-off into a new company that will be capitalized with approximately C$10 million in cash.
The proposed transaction requires approval by at least two-thirds of the votes cast by Brigus shareholders at a special meeting. The issuance of Primero common shares in connection with the proposed transaction will require the approval of a majority of the shareholders of Primero voting at a special meeting. Goldcorp, which holds approximately 27% of the outstanding Primero common shares, has agreed to vote in favor of the proposed transaction.
Assuming completion of the transaction, Primero shareholders and Brigus shareholders will own approximately 73.4% and 26.6%, respectively, of Primero.