UPDATE 2-Canada's B2Gold adds gold deposit in Mali with Papillon buy

Tue Jun 3, 2014 2:20pm EDT
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* Deal to increase B2Gold's mineral resources by 25 pct

* Acquisition too expensive for B2Gold - analyst

* B2Gold shares fall 9 pct (Adds analyst comments, background, updates shares)

By Sneha Banerjee and Swetha Gopinath

June 3 (Reuters) - Canada's B2Gold Corp said it would buy Australia's Papillon Resources Ltd in a stock deal valued at $570 million to gain access to its Fekola gold deposit in Mali.

B2Gold shares fell as much as 9.2 percent on the Toronto Stock Exchange, on investor concerns over the company's plan to invest in a non-producing mine in a politically sensitive region.

There has been no trading in Papillon shares since May 23.

The Fekola deposit, located in south-western Mali close to the border with Senegal, could produce an average of 306,000 ounces of gold per year, according to Papillon's latest annual report.

Papillon was granted a permit earlier this year to develop and mine the deposit.   Continued...