BRITISH COLUMBIA

B2Gold plans merger with CGA Mining in all-stock deal valued at $1.1 billion

09/19/2012 07:33 EDT | Updated 11/19/2012 05:12 EST
VANCOUVER - B2Gold Corp. (TSX:BTO) expects to make a "a big jump forward" in its expansion plans by acquiring CGA Mining Ltd. (TSX:CGA) 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 chief executive 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 chief executive 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 will play a key role in bringing those projects to fruition. We are pleased to be a part of B2Gold's platform of growth, discovery and superior performance," Carrick said in the companies' joint statement.

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 in Nicaragua, Colombia, Uruguay as well as in Namibia.

CGA's main asset is the Masbate gold mine, which the companies say is the largest gold project in the Philippines. It has 3.2 million ounces of proven and probable gold reserves.

B2Gold shares were down 36 cents or about eight per cent with more than five million shares traded in the first 10 minutes of the market's open. CGA's stock gained 17 cents or about six per cent, with 3.3 million traded..