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UPDATE 1-Anaconda Mining, New Island agree to friendly deal
August 30, 2010 / 2:42 PM / in 7 years

UPDATE 1-Anaconda Mining, New Island agree to friendly deal

* Anaconda to buy interest in Pine Cove mine

* Exchange ratio at 0.42-0.45 Anaconda shr/New Island shr

* New Island to continue as public co

* Deal expected to close by Oct.15

* Anaconda Mining shares up 6 pct

Aug 30 (Reuters) - Anaconda Mining (ANX.TO) said on Monday it struck a friendly deal with gold explorer New Island Resources NIS.V to acquire its interest in Pine Cove mine, after warning late last week of going hostile with the bid.

About 22.6 million Anaconda shares will be distributed at an exchange ratio of 0.42-0.45 Anaconda share per New Island share, the companies said in a joint statement, adding the exact ratio will be determined later.

Under the offer, which ends a protracted takeover battle, New Island will continue as a public company and retain its Glover Island property and all of its remaining assets. [ID:nSGE67O0KR]

New Island, which holds gold and base metal properties in Newfoundland and Labrador, said it will immediately cease all regulatory and other legal proceedings on the issue.

The deal, which is expected to close by Oct. 15, also allows New Island to issue securities worth up to C$325,000 to retire debts.

The deal will help Anaconda Mining, which holds a 41 percent stake in New Island, to gain control of the Pine Cove mine in Baie Verte, Newfoundland.

Anaconda Mining shares opened up 6 percent at 27.5 Canadian cents Monday on the Toronto Stock Exchange, but pared most of those gains and were up 2 percent at 26.5 Canadian cents.

New Island shares, which have doubled in the past three months, closed at 10.5 Canadian cents Friday on the Toronto Venture Exchange. (Reporting by Gowri Jayakumar in Bangalore; Editing by Unnikrishnan Nair)

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