B2Gold to Acquire CGA Mining for C$1.1B – More Deals Ahead?

Yesterday GoldAlert noted that a number of investors and executives in the gold mining industry expect merger and acquisition (M&A) activity in the sector to pick up in the months ahead.  In a particularly timely fashion, today’s news that B2Gold (BTO.TSX) has agreed to acquire CGA Mining (CGA.TSX) for C$1.1 billion reinforces that view.

This morning, the two companies announced an agreement whereby CGA.TSX shareholders will receive 0.74 shares of BTO.TSX in an all-stock transaction.  The exchange ratio equates to a purchase price of C$3.18 per share for CGA, a 26% premium over its closing price two days ago.

In mid-day trading, CGA.TSX climbed C$0.24, or 9.1%, to C$2.89 while BTO.TSX tumbled C$0.32, or 7.4%, to C$3.98 per share.

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CGA’s flagship asset is the Masbate gold mine, the largest operating gold project in the Philippines.  CGA expects Masbate to produce 200,000 ounces over the 12-month period ending June 30, 2013.

Prior to today’s announcement, CGA Mining was ranked #2 out of 95 gold and silver stocks covered by GoldAlert Pro – which provides analysis and commentary on nearly all of the companies included in the Market Vectors Gold Miners ETF (GDX) and Market Vectors Junior Gold Miners ETF (GDXJ).  Please visit http://pro.goldalert.com for more information

Clive Johnson, CEO of B2Gold, stated that “We believe CGA and its flagship Masbate mine offers B2Gold shareholders immediate leverage to a significantly larger combined production profile.”

B2Gold operates the La Libertad and Limon mines in Nicaragua.  The Company noted that once the deal closes, its total production is expected to come in at approximately 350,000 ounces of gold in 2012 and to rise to 700,000 ounces by 2016.

TD Securities analyst Steven Green wrote in a note to clients that “B2Gold is taking advantage of a strong share price and valuation to add a steady producing asset with a long mine life at what appears to be an attractive purchase price.”