B2Gold Corp. expects to make a "a big jump forward" in its expansion plans by acquiring CGA Mining Ltd. and its mine in the Philippines through a friendly all stock deal they value at $1.1 billion.
The combined company will have operating mines in Nicaragua and the Philippines and other properties at the development or exploration stage in Latin America and Africa, if the proposed deal gets the required approvals,
"For B2Gold, the combination with CGA represents the opportunity to dramatically increase our gold production from 160,000 ounces a year - which is growing from our development projects - to 360,000 ounces a year with the completion of this transaction," B2Gold CEO Clive Johnson said.
Johnson told analysts in a conference call that the Vancouver-based company expects deposits at or near B2Gold's two mines in Nicaragua will begin production in the coming years. In addition, a new mine planned for Namibia is expected to produce 100,000 ounces a year when it's built.
"So B2Gold is a rapidly growing company and we've taken a big jump forward here in adding what we consider to be, subject to closing this deal, an excellent project - which has great exploration upside and, ultimately, potential to expand production from where it is today."
Shareholders of B2Gold - which had a market value of nearly $1.7 billion before the announcement - will own about 62 per cent of the combined company, which is projected to produce 700,000 ounces of gold by 2016.
CGA, an Australian company that lists its shares in Canada as well, had a market value of $895 million prior to the announcement, based on a Tuesday closing stock price of $2.65 per share at the Toronto Stock Exchange.
B2Gold's offer of 0.74 share for each CGA share was worth about $3.18 when announced. B2Gold shares closed Tuesday at $4.30 on the TSX, but fell after trading resumed Wednesday while CGA's rose.
CGA CEO Michael Carrick said the deal provides an opportunity to join a management team with a demonstrated track record of creating value for shareholders. "B2Gold has a remarkable development profile ahead, and Masbate [mine] will play a key role in bringing those projects to fruition."
The combined 2012 production of the two companies is expected to be 350,000 ounces, including 200,000 ounces from CGA's mine in the Philippines.
B2Gold, founded by the former executive and management team of Bema Gold which was acquired by Kinross Gold Corp. in 2007, has two mines in Nicaragua and a portfolio of development or exploration properties.
