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Goldcorp Inc said on Monday it has agreed to buy Probe Mines Ltd in an all-stock deal that values the metals exploration company at $526 million, in a bid to win control of the Borden Gold project in northern Ontario.
The project, located some 200 km (125 miles) southwest of the gold mining hub of Timmins, Ontario, is viewed as one of the most promising new gold discoveries in Canada.
Probe's Chief Executive David Palmer is set to receive an award at this year's Prospectors & Developers Association of Canada convention in March for the discovery that boasts some two million ounces of relatively high-grade gold resources.
The deal also puts another feather in the cap of Barrick Gold veteran Jamie Sokalsky who just four months ago stepped in as chairman of Probe after having stepped down as CEO of the world's largest gold producer.
"We believe this transaction is an excellent outcome for Probe shareholders as it provides them with a significant premium that recognizes the value embedded in Borden," said Sokalsky in a statement.
The transaction, which is expected to close in March, values each Probe share at $5, a 49-percent premium to the company's closing price of $3.36 a share on Friday.
"This transaction is consistent with Goldcorp's longstanding strategy of securing growth opportunities in and around our existing districts with a focus on low-cost, high-quality gold production," said Goldcorp CEO Chuck Jeannes in a statement.
Borden is located some 160 km (100 miles) west of Goldcorp's Porcupine mine, which has been in continuous operation for over 100 years.
Goldcorp said transporting ore to Porcupine would greatly reduce capital costs and permitting requirements compared to a stand-alone development. It would also put Goldcorp in a position to deliver higher-grade ore to Porcupine within a relatively short development period.
BMO Capital Markets acted as Probe's financial advisor on the deal, while Goldcorp was advised by GMP Securities.