* Offer of C$3.18/share represents 20 pct premium
* B2Gold expects total production of 350,000 ounces this
* Deal expected to close by year end - B2Gold CEO
* CGA shares rise 11 pct on TSX; B2Gold shares fall 9 pct
Sept 19 Canadian miner B2Gold Corp will
buy CGA Mining Ltd for C$1.1 billion ($1.13
billion) to gain access to one of the largest gold mines in the
The South East Asian country sits over $850 billion reserves
of gold, silver and other metals, based on government estimates.
CGA expects its flagship mine on the island of Masbate to
produce 200,000 ounces of gold in the year ending June 30, 2013.
B2Gold, which operates two mines in Nicaragua, expects the
deal to ramp up total production to 350,000 ounces this year. It
had earlier forecast production of 185,000 ounces in 2013 and
200,000 ounces in 2014.
The deal will add to reserves, production, cash flow and
earnings, B2Gold CEO Clive Johnson told Reuters.
"It becomes accretive to us as we get into the first quarter
of next year on earnings basis," Johnson said.
The combined company will have proven and probable reserves
of 3.9 million ounces, B2Gold said. The Masbate project has
reserves of 3 million ounces, according to CGA website.
Johnson said there may be some tax increases in the
The International Monetary Fund has recommended Manila scrap
all mining incentives, including a five-year tax holiday.
"From the homework we have done and talking to CGA ... any
increase in tax will be reasonable and we have built in all
that," Johnson said.
GOLD PRICE SPURS GROWTH
The price of gold has risen more than five-fold in
the last decade, from about $300 an ounce in 2002 to about
$1,720 an ounce, a stratospheric rise that has pushed gold
miners to seek growth at any cost.
B2Gold, with cash and cash equivalents of $77.3 million at
the end of the second quarter, has made an offer of C$3.18 per
share, representing a premium of 20 percent to CGA's Tuesday
closing price on the Toronto Stock Exchange.
CGA shareholders will receive 0.74 shares of B2Gold for each
share they hold, the companies said.
Genuity Canaccord Corp advised B2Gold while BMO Capital
Markets and Haywood Securities Inc advised CGA.
The CGA board recommended a vote in favor of the proposed
deal, in the absence of a superior proposal. The deal agreement
also includes no-shop and no-talk provisions.
The deal is expected to close by the end of this year,
B2Gold CEO said.
Shares of CGA, which had a market value of about C$879
million before the deal, rose more than 11 percent to C$2.95 on
Wednesday on the Toronto Stock Exchange. Shares of
Vancouver-based B2Gold fell more than 9 percent to C$3.96.