The enlarged Primero would produce the equivalent of 250,000 to 270,000 ounces of gold by next year from two producing mines.
It also has the potential to produce 400,000 gold-equivalent ounces by 2017.
"This acquisition is immediately accretive to our production and cash flow," Joseph Conway, Primero's chief executive, said in a statement.
"It also diversifies Primero geographically, into a very prospective and proven mining jurisdiction that our team is excited to operate in."
Brigus chief executive Wade Dawe said the deal gave the company access to Primero's strong balance sheet and cash flow, enabling it to move ahead with its Black Fox mine as well as its Grey Fox project.
"The combined company will also benefit from improved market liquidity and Primero's proven management team with a demonstrated track record of successfully growing precious metals mining companies," Dawe said.
The deal values Brigus shares at 91 cents each — a 45 per cent premium to the market price — based on the Primero's closing price of $5.22 on the Toronto Stock Exchange on Friday.
Primero shares closed down 35 cents at $4.87 on the Toronto Stock Exchange on Monday, while Brigus shares closed up 21 cents at 84 cents.
Brigus shareholders would own about 26.6 per cent of Primero's equity after the transaction and 90.1 per cent of a new company that will be spun off with some Brigus assets. The companies haven't assigned a value to the newly incorporated spin off company.
Under the deal, each outstanding Brigus common will be exchanged for 0.175 of a Primero common share and 0.1 of a common share of the new company.
All outstanding options to purchase Brigus common shares will be exchanged for options to purchase Primero and shares in the Brigus spin off at the same ratios as the stock exchange.
The spin off company will hold Brigus' interests in the Goldfields project in Saskatchewan and the Ixhuatan and Huizopa projects in Mexico and will be capitalized with approximately C$10 million in cash.