Precious Metals

Centerra Gold Strikes C$310-million Deal to Buy AuRico Metals

The deal is expected to close in January 2018 after shareholder and regulatory approvals. AuRico’s share price ended up over 35 percent on the news.

Centerra Gold (TSX:CG) signed a friendly deal to acquire AuRico Metals (TSX:AMI) for C$310 million, the companies announced in a joint statement on Tuesday (November 7).
Toronto-based Centerra offered C$1.80 per share, a 30-percent premium on the closing price of AuRico Metals on Monday (November 6).
The deal will be funded through cash in hand and debt, and is expected to close in January 2018 after shareholder and regulatory approvals.


AuRico is developing the Kemess property in BC. The asset hosts the feasibility-stage Kemess underground gold-copper project, the Kemess East project and the infrastructure from the past-producing Kemess South mine.
“With the acquisition of the AuRico Metals assets, Centerra expands its existing development pipeline to include another low-cost de-risked brownfield development asset, the Kemess property,” said Stephen A. Lang, chairman and director at Centerra.
AuRico also owns a royalty portfolio, which includes a 1.5-percent NSR royalty on Canada’s Young Davidson gold mine, operated by Alamos Gold (TSX:AGI), and a 2-percent NSR royalty on the Australia-based Fosterville mine, operated by Kirkland Lake Gold (TSX:KLG).
After the deal, Centerra hopes “to be firmly established as a low-cost gold producer with a geographically diversified footprint and peer-leading development pipeline.”
The company already operates a mine in BC, the Mount Milligan property, and holds other assets in North America and around the world.
In September, the company reached an agreement with Kyrgyzstan to settle all outstanding disputes over the Kumtor mine, the company’s flagship asset. Kumtor, which lies near the Chinese border at an altitude of 4,000 meters, has produced around 10 million ounces since inception, with remaining reserves standing at 5.6 million ounces.
On Tuesday, Centerra Gold’s share price was down 3.85 percent, trading at C$7.74 in Toronto. Meanwhile, AuRico Metals’ share price jumped 36.92 percent after the news to change hands at C$1.78.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
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