B2Gold To By Australia's CGA Mining In C$1.1 Bln All-stock Deal

9/19/2012 11:00 AM ET

Canadian miner B2Gold Corp. (BTO.TO: Quote, BGLPF) agreed Wednesday to buy Australia's CGA Mining Ltd. (CGA.TO: Quote, CGX.AX) in an all-stock deal valued at about C$3.18 per share or a total of about C$1.1 billion or $1.13 billion.

The deal will see CGA Mining shareholders receive 0.74 common shares of B2Gold for each CGA share held by them, implying a value of C$3.18 per share, based on B2Gold's closing share price of C$4.30 on Tuesday. Meanwhile, B2Gold shareholders will continue to hold their existing B2Gold common shares.

The offer price of C$3.18 represents a 20 percent premium to CGA Mining's closing share price of C$2.65 on Tuesday.

B2Gold noted that it also proposes to acquire all outstanding CGA options and issue B2Gold shares as consideration for the cancellation of the options.

Following the closure of the deal, the existing B2Gold shareholders will own about 62 percent of the issued common shares of the combined company, with CGA shareholders owning the remaining 38 percent. The deal will help B2Gold to add production in Philippines.

The deal has the unanimous approval of the directors of both the companies and they also recommend their respective shareholders to vote in favor of the proposed deal.

Each director of both companies intend to vote all shares over which they control in favor of the deal at a separate meetings of the shareholders of B2Gold and CGA to be convened later this year.

The deal is primarily subject to approval by 75 percent of the number of votes cast, and 50 percent of the number of CGA shareholders present and voting at the meeting.

The merger is also subject to regulatory approvals such as from the Australian Foreign Investment Review Board, as well as from the ASX and TSX in respect of the issue of new B2Gold shares. It is also conditional to Australian Court, shareholder, and third party approvals. CGA Mining is focused on exploring, developing and operating resource opportunities throughout the world, with it's principal asset being the producing mine, the Masbate Gold Mine in the Philippines.

"We believe CGA and its flagship Masbate mine offers B2Gold shareholders immediate leverage to a significantly larger combined production profile. With this transaction, B2Gold has taken a major step towards cementing itself as a leading gold sector consolidator, providing for geographic and operational diversity while contributing significant cash and future cash flow towards B2Gold's exciting development projects," B2Gold President and CEO Clive Johnson said in a statement.

The merged company will primarily operate the Masbate gold mine in the Philippines, in addition to B2Gold's existing Limon and La Libertad gold mines in Nicaragua. It will also possess a strong growth profile through its Otjikoto project in Namibia and its Gramalote joint venture (49 percent B2Gold and 51 percent AngloGold Ashant) project in Colombia.

"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," CGA President and CEO Michael Carrick stated.

The terms of the deal also provide for a no shop and no talk provision, and a right to match a superior offer and a mutual reimbursement fee payable by B2Gold or CGA in specified circumstances.

In Wednesday's regular trading session on the TSX, BTO.TO is currently trading at C$3.93, down C$0.37 or 8.60% on a volume of 9.04 million shares, while CGA.TO is trading at C$2.86, up C$0.21 or 7.92% on a volume of 9.04 million shares.