Canadian mining company Centerra Gold yesterday struck a deal to buy US–based miner Thompson Creek Metals in a $1.1 billion cash and stock deal, in order to expand its footprint in North America.
The $1.1-billion deal includes Centerra paying off $889 million debt of Thompson Creek Metals.
Under the terms of the transaction, Thompson Creek's common shares will be exchanged on the basis of 0.0988 of a Centerra share for each Thompson Creek share.
Post closing, Centerra and Thompson Creek shareholders are expected to own approximately 92 per cent and 8 per cent respectively, of the company.
The exchange ratio is C$0.79 per Thompson Creek common share, based on the closing price of Centerra shares on 4 July for a value of $140 million. The offer is a 32 per cent premium to the closing price of Thompson Creek's on the TSX on 4 July 2016.
Late last year, Thompson Creek hired Moelis & Co and BMO Capital Markets to look at alternatives, including debt refinancing and restructuring and asset sales.
The move came after Thompson Creek's debt shot up and rated as junk due to its 2010 acquisition of Mount Milligan and the related cost in developing it into a mine.
Colorado-based Thompson Creek operates the Mount Milligan Mine, an open-pit gold and copper mine and concentrator in British Columbia.
Its molybdenum assets consist of its wholly-owned Thompson Creek Mine, an open-pit molybdenum mine and concentrator in Idaho, its 75 per cent joint venture interest in the Endako Mine, an open-pit molybdenum mine, concentrator and roaster in British Columbia, and its Langeloth Metallurgical Facility in Pennsylvania.
The company's development projects are the Berg and IKE properties, both copper, molybdenum and silver exploration properties located in British Columbia.
Mount Milligan is expected to produce up to 270,000 ounces of gold and 65 million pounds of copper this year.
Toronto-based Centerra is a gold mining company focused on operating, developing, exploring and acquiring gold properties in Asia, North America and other markets worldwide.
The Toronto Stock Exchange -listed company is the largest Western-based gold producer in Central Asia.