Overview of the Acquisition
Mexican precious metals miner Fresnillo has agreed to acquire Canadian company Probe Gold for 780 million Canadian dollars (approximately 556 million US dollars) in cash, the companies announced on Friday. This acquisition marks Fresnillo’s expansion into North American markets, as it currently trades in London.
Background on Probe Gold
Probe Gold, led by CEO David Palmer, has been developing the Novador project in Quebec for nine years. The Novador project is Probe Gold’s flagship plan, with the potential to produce over 200,000 ounces of gold annually for more than a decade.
Terms of the Agreement
Under the terms of the agreement, Fresnillo will pay CA$3.65 per Probe Gold share in cash, representing a nearly 39% premium over Probe Gold’s last closing price. This acquisition grants Fresnillo access to Probe Gold’s 10 million ounces of gold resources, including the Novador project in Quebec.
David Palmer, Probe Gold’s CEO, stated, “After nine years of steady progress on the Novador project, we believe this is the right time to transfer the project to an experienced operator.” He further emphasized that Fresnillo has the necessary expertise to advance the Novador project from permitting to construction.
Fresnillo’s Current Operations
Fresnillo, which operates eight mines in Mexico and has exploration projects in Peru and Chile, plans to develop the Novador project once the transaction is completed.
Octavio Alvídrez, Fresnillo’s CEO, reaffirmed that Mexico will remain central to their strategy. He added that Probe Gold’s assets will “significantly complement” Fresnillo’s project portfolio.
Support from Probe Gold Stakeholders
Directors, officers, and the largest shareholder of Probe Gold, Eldorado Gold (which holds 12% of the shares), have agreed to support the transaction by voting in favor of it.
Key Questions and Answers
- Who is Fresnillo? Fresnillo is a Mexican mining company specializing in precious metals, operating eight mines in Mexico and having exploration projects in Peru and Chile.
- Why is this acquisition significant? This acquisition allows Fresnillo to expand its presence into North American markets and gain access to Probe Gold’s valuable gold resources, specifically the Novador project in Quebec.
- What is the Novador project? The Novador project is Probe Gold’s flagship plan, with the potential to produce over 200,000 ounces of gold annually for more than a decade.
- Why is this acquisition beneficial for both companies? Fresnillo gains access to valuable gold resources and an experienced project, while Probe Gold benefits from Fresnillo’s expertise in advancing the Novador project through permitting and construction.
