(MENAFN- ProactiveInvestors)
Toronto based (TSE:YRI) (NYSE:AUY) will buy Inc. () for C$17.5 million or C$0.10/share.
Mega owns the Monument Bay site near Red Sucker Lake Manitoba and has developed and explored the mine since 2011 delivering overall measured and indicated resources of 2.1 million ounces.
Yamana will acquire all of the outstanding shares of Mega in a mixed transaction involving some Yamana shares and cash based on its TSE closing price of April 23 2015.
Mega’s portfolio includes the flagship Monument Bay Gold Tungsten Project in NE Manitoba as well as the N. Madsen Gold Project in the prolific gold mining district of Red Lake Ontario.
Yamana is a Toronto-based gold company with gold production development and exploration assets in Brazil Chile Argentina Mexico and Colombia.
Mega's board of directors has unanimously approved the transaction and recommends that Mega shareholders vote in favour of the arrangement:
"The Monument Bay Project has grown into what we consider to be one of the best development assets in the industry and we are proud to be part of this story. Our team has assembled a 338km2 camp-sized land position advanced the project to its current multi-million ounce resource formulated a regional geological and targeting model including the realization of a potential tungsten by-product and importantly we have developed a positive and respectful relationship with the Red Sucker Lake First Nation. The acquisition by Yamana allows the work done on Monument Bay to continue unabated to the benefit of all stakeholders" said Mega’s Chairman Mario Stifano summarizing the board’s opinion on the sale.
Yamana expects to convert the potential of Mega’s work at the Monument Bay and North Madsen projects and their significant existing mineral resource base into productive assets.
"The acquisition of advances Yamana’s strategy to expand our presence in Canada which we established last year with the joint acquisition of Canadian Malartic and a portfolio of exploration properties in Quebec and Ontario" said Yamana’s Senior Vice President Exploration William Wulftange.
The transaction is expected to close in late June of 2015 subject to the satisfaction of certain conditions including court and shareholder approval and the completion of Yamana's due diligence.
In 2014 Yamana took a 50% stake with Montreal’s Osisko for C$929 million through which it gained access to the Malartic mine in northern Quebec and all its other projects.
The prospect of losing Malartic’s potential and the closure of Osisko’s head office in Montreal in the wake of a failed unsolicited offer from in 2014 had provoked many reactions in the Quebec business and political communities such that Yamana’s bid was welcomed.
Yamana meanwhile appears to have resumed its hunt for growth targets in Canada after announcing last February that it would spend C$398-million to build the gold and silver Cerro Moro mine in Argentina despite depressed gold prices.
Yamana’s shares were trading 2.09 percent down this afternoon in Toronto at C$4.68 while Mega’s shares doubled to C$0.09/share.
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