CENTERRA GOLD INC (OTCMKTS:CAGDF)
Shares of AURICO METALS INC (OTCMKTS:ARCTF) gained 36.36% after CENTERRA GOLD INC (OTCMKTS:CAGDF) said it will acquire the smaller rival. The Canadian miner has tendered a bid that values the Company at C$310 million ($243 million).
Centerra Acquisition Bid
CENTERRA GOLD INC (OTCMKTS:CAGDF)’s offer values AURICO METALS INC (OTCMKTS:ARCTF) at C$1.80 per share in cash, representing a 38.5% premium to Monday Close. The company plans to fund the deal through cash on hand and debt. The deal should close early next year subject to satisfaction of customary closing conditions.
For the deal to sail through, it requires approval by two-thirds of the total votes cast at a special meeting of shareholders. The deal also requires court and regulatory approval. AuRico Metals directors and senior officials (who hold about 11.4% of the company) have already agreed to vote in favor of the deal.
Stephen Lang, Chairman, and Director of CENTERRA GOLD INC (OTCMKTS:CAGDF), said, “With the acquisition of the AuRico Metals assets, Centerra expands its existing development pipeline to include another low-cost de-risked brownfield development asset, the Kemess property, located in Canada-one of the lowest risk mining jurisdictions in the world.
AURICO METALS INC (OTCMKTS:ARCTF) has been trading in an uptrend since the start of the year. Taking into consideration Tuesday’s breathtaking rally, the stock is now up by more than 90% for the year. The 38.5% premium on offer with Centerra’s deal appears to have strengthened investor confidence on the stock pending closure of the deal.
A merger with CENTERRA GOLD INC (OTCMKTS:CAGDF) will allow the company to secure funding for the development of Kemess project to full potential.
A move by CENTERRA GOLD INC (OTCMKTS:CAGDF) to acquire AuRico does not come as a surprise. In recent years, Canadian Miners have resorted to acquisitions to strengthen their position in the industry after coming under pressure from foreign governments over profit sharing at key mines.
AURICO METALS INC (OTCMKTS:ARCTF) should enhance CENTERRA GOLD INC (OTCMKTS:CAGDF)’s High-quality asset base. The company will gain access to a de-risked brownfield development asset located in Canada that is complimentary to Mount Milligan operation. The asset has the potential to generate meaningful synergies. The acquisition also comes with high-quality cash flow generating portfolio.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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