Canadian gold miner Northgate to acquire Primero Mining for C$370.4 mn

Canadian gold miner Northgate Minerals today said that it has a definite agreement to acquire Mexico focussed Primero Mining for C$370.4 million ($383.7 million) in stock.

Vancouver, British Columbia-based Primero is a low cost gold miner, which owns 100 per cent of the San Dimas gold-silver mine in Mexico. The San Dimas mine is located on the border of the States of Sinaloa and Durango, some 125km northeast of Mazatlan in central west Mexico.

Under the terms of the deal, Northgate will acquire all the shares of Primero for 1.50 Northgate common shares per Primero share at $4.215 for each Primero common share based on 12 July closing price of $2.81 on the Toronto Stock Exchange, a premium of  13.9 per cent to Primero's closing price on 12 July.

Upon completion of the transaction, Northgate and Primero shareholders will own approximately 69 per cent and 31 per cent of the combined company, respectively.

The combined companies will have three producing gold mines with 320,000 gold equivalent ounces in 2011 increasing to 550,000 ounces in 2013.

Primero's largest shareholder, Goldcorp Inc, has agreed to vote in favour of the deal, Northgate said in a statement.