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‘Feels like a new gold market,’ says analyst of the $526 million deal
Amid a struggling metals market, Goldcorp Inc. has struck an all-stock deal valued at $526 million to buy Toronto’s Probe Mines Ltd. and scoop up one of Canada’s most promising new gold discoveries in northern Ontario.
The friendly takeover gives the Vancouver bullion giant control of the highly-touted Borden gold project near Chapleau, Ont., about 160 kilometres west of Goldcorp’s century-old Porcupine mine in Timmins.
Shares in the Toronto-based junior explorer jumped 49 per cent after the Goldcorp announcement Monday that analysts say, among other recent industry acquisitions, signals new interest in the depressed gold mining sector.
“It feels like we are in a new gold market,” said analyst Barry Allan of Research Capital Corp. “It means we should see a lift on other gold assets if they are also well-located and high quality,” he said.
The price of gold has jumped 10 per cent so far this year after limping through a bear market that has rocked the cyclical industry since the heady days of its all-time high of $1,921 U.S. an ounce in September, 2011.
Goldcorp chief executive Chuck Jeannes said the Borden deposit is uniquely suited to the miner’s asset portfolio due to its proximity to the Porcupine mining and mill operation.
“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,” Jeannes said.
The recent Borden discovery is expected to mark the beginning of a significant gold district in Canada. Probe’s chief executive David Palmer is being recognized for the find at the annual Prospectors and Developers Association of Canada in Toronto in March.
“Over the past four years, Borden has grown into what is widely considered to be one of the best development assets in the industry, and we are proud to have been part of this story,” Palmer said.
“This acquisition represents not only a validation of the project and its value, but also an opportunity for shareholders to participate in future success with one of the industry’s most respected gold producers,” he added.
The deal also puts former Barrick chief executive Jamie Sokalsky, now Probe’s board chairman, back on the radar after stepping down last year amid a management shakeup at 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,” Sokalsky said.
The companies said the offer is worth $5 per Probe share, representing a 49 per cent premium to the stock’s closing price of $3.36 on the TSX Venture Exchange Friday before the deal was announced.
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