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Brio Gold board agrees to sweetened LeaGold takeover offer


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Brio Gold board agrees to sweetened LeaGold takeover offer

Brio Gold Inc. shares jumped nearly 10% in early afternoon trading in Toronto on Feb. 16 after the miner's board agreed to back a sweetened offer and struck a definitive deal to be acquired by LeaGold Mining Corp. in an all-share deal valuing the company at C$314 million.

In late January, LeaGold made an all-share takeover bid of US$264 million for Brio Gold, which later urged its shareholders to take no action until the board fully reviewed the offer and made a recommendation.

However, LeaGold had said it secured support from Brio Gold majority shareholder Yamana Gold Inc., which has a 53.6% interest, and shareholders representing about 57% of its own stock.

Under the latest offer, which is recommended by the Brio Gold board, its shareholders will receive 0.922 of a LeaGold common share and 0.4 of a LeaGold share purchase warrant against each share held.

The consideration implies a total value of about C$2.67 per Brio Gold share.

The offer price represents a premium of 51% to the closing share price of Brio Gold on the Toronto Stock Exchange on Jan. 22.

The combined company is expected to produce about 447,500 ounces of gold in 2018 and has potential to grow annual production to more than 700,000 ounces by 2020 with all-in sustaining costs of about US$850/oz.

Upon completion of the transaction, and assuming Goldcorp Inc. does not exercise its anti-dilution rights with respect to LeaGold shares, existing Brio Gold and LeaGold shareholders are expected to own about 42% and 58%, respectively, of the resulting entity.

Brio Gold President and CEO Gil Clausen will join the board of LeaGold upon completion, which is subject to approval from both companies' shareholders.