(Reuters) -Canadian miner Equinox Gold Corp said on Wednesday it would buy Premier Gold Mines Ltd in an all-stock deal valued at C$611.7 million ($479.9 million) and simultaneously spin-out Premier's U.S. production assets.
The deal is worth about C$2.57 per share, which represents a 2% premium to Premier's Tuesday close, as per Reuters calculation. However, the exact value that Premier shareholders will get depends on the pricing of the spin-out company's shares.
Deal making has picked up in the industry as gold prices have hit a record high of above $2,000 an ounce this year as a slowdown in economic activity and surging coronavirus cases boosted demand for the precious metal.
On Tuesday, private equity firm Orion Mine Finance Group had entered into an agreement to buy gold miner Centerra Gold Inc's 50% interest in the Greenstone Gold Mines partnership for $225 million in cash. Premier Gold has a 50% stake in the partnership.
Premier shareholders will receive 0.1967 of an Equinox share for each share held and 0.4 of a share in the spin-out company i-80 Gold Corp, the companies said on Wednesday.
Upon deal closing, Equinox Gold will own about 84% of Equinox Gold and Premier shareholders about 16%. Equinox Gold and the existing shareholders of Premier will own 30% and 70% of i-80 Gold, respectively, on an issued share basis.
The transaction is expected to close in the first quarter of 2021.
($1 = 1.2746 Canadian dollars)