(Reuters) - Argonaut Gold Inc AR.TO said it will buy Prodigy Gold Inc PDG.V for about C$341 million ($348 million) to take control of Prodigy’s Magino project in Ontario.
The offer, almost entirely in shares, works out to C$1.08 per share based on Argonaut’s 20-day average share price and is at a premium of 54 percent to Prodigy’s 20-day average price, Argonaut said.
“Magino is a highly attractive asset which has shown continued resource growth ... which we believe will provide a longer term production opportunity,” Argonaut chief executive Pete Dougherty said in a statement.
Prodigy shareholders will receive 0.1042 of an Argonaut Gold share and C$0.00001 in cash per share, the companies said.
Based on Argonaut’s Friday closing of C$10.48, the deal value comes to C$320.2 million.
On the completion of the deal, about 78 percent of Argonaut will be owned by its current shareholders and the remaining 22 percent by shareholders of Prodigy.
BMO Capital Markets is acting as the financial advisor to Argonaut.
Vancouver-based Prodigy was formed though the combination of Kodiak Exploration and Golden Goose Resources, and its Magino project contains indicated resources of 6.3 million ounces of gold.
Indicated resources, based on detailed exploration and testing information, are sufficient to support feasibility studies.
The Magino mine is in the Goudreau-Lochalsh gold district of the Wawa gold camp.
($1 = 0.9787 Canadian dollars)
Reporting by Shounak Dasgupta in Bangalore; Editing by Sreejiraj Eluvangal