Goldcorp Agrees to Buy Probe Mines for $440 Million
In a bid to continue dominance in the Canadian mining market, Goldcorp Inc. has agreed to buy junior mining company Probe Mines Ltd. in an all-shares deal valued at about $440 million. The mega deal will assist the Vancouver-based company in expanding its presence in one of its core districts in Northern Ontario.
"This transaction is consistent with Goldcorp's long-standing strategy of securing growth opportunities in and around our existing districts with a focus on low-cost, high-quality gold production," Chuck Jeannes, Goldcorp's chief executive, said in a statement.
Per the deal, the gold miner is offering Probe investors 0.1755 shares for each share they own. The offer of about $4.04 per share is 49 percent more than Probe’s closing price on Friday. In addition to Goldcorp shares, shareholders of Probe will be entitled to an interest in a new exploration company called New Probe.
“This transaction is an excellent outcome for Probe shareholders as it provides them with a significant premium that recognizes the value embedded in Borden,” Probe Chairman Jamie Sokalsky said in a statement.
The primary purpose for Goldcorp’s purchase of Probe Mines is the company’s 100 percent owned Borden Gold project. Located near Chapleau in Ontario, the high-quality deposit is in close proximity to Goldcorp’s Porcupine mine which includes the large milling facility at the Dome complex.
The deal will enable Goldcorp to require considerably lesser capital costs and permitting requirements to transport ore to the Porcupine operations.
"In combination with the recently-announced sale of the Wharf mine, this strategic acquisition is the latest example of our commitment to upgrading the quality of Goldcorp's overall asset portfolio," Jeannes said.
The deal has already been approved by the boards of Goldcorp and Probe. The transaction is expected to close by the end of March 2015. If the deal is not completed by the mentioned date, Probe has agreed to pay Goldcorp a termination fee of roughly $14.5 million, under specific circumstances.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”