New Gold to buy Bayfield; Scorpio and US Silver & Gold to merge | Reuters

posted on 01 Jun 2015 09:16 by magnificentharb61
TORONTO Nov 10 The precious metals sector in

Canada, which has been battered by the plunge in gold and silver

prices, received a small spot of positive news on Monday, with

the announcement of two separate MA deals.

Investment bankers and industry insiders believe more such

deals will be needed for miners, whose share prices have dropped

in recent months, to ride out the extended slump.

Vancouver, British Columbia-based New Gold said on

Monday it planned to buy exploration company Bayfield Ventures

Corp for C$16.6 million to expand its land holdings in

the Rainy River mining district in northwestern Ontario.

Separately late on Friday, two silver miners Scorpio Mining

and U.S. Silver Gold also announced plans to

merge, creating a C$65 million ($57.5 million) combined entity

with a bigger portfolio of silver assets in the Americas.

The deals at values substantially below historical highs

reflect the challenges facing the sector, as gold prices have

dropped over 30 percent, and silver has plunged more than 50

percent over the last two years.

Bankers and industry executives say the tough market is

likely to compel miners to consider merging and striking deals

at previously untenable levels in order to survive.

To win investor support for such deals, bankers and lawyers

contend most are likely to be in the form of equity rather than

cash to give shareholders the possibility of future upside, if

and when precious metal prices begin to rebound.

Both the New Gold-Bayfield and Scorpio-U.S. Silver Gold

deals are equity-based.

New Gold plans to pay 0.0477 of a share for each Bayfield

share tendered, and U.S. Silver Gold shareholders would

receive 1.68 common shares of Scorpio for each share they


New Gold said it would integrate Bayfield's assets, which

include interests in three properties in northwestern Ontario,

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The company had built its

position in the district by acquiring Rainy River Resources Ltd

for C$310 million in 2013.

The combined Scorpio-U.S. Gold Silver entity would have

two producing mines, a third in development, and an advanced

stage exploration project, the companies said. It will be called

Scorpio Mining.

The companies said the combined entity will produce between

4.5 and 5 million silver equivalent ounces annually. Both

boards have approved the deal, and officers and directors in

both companies are voting shares they control in favor of it.

In addition, Tocqueville Asset Management, which controls

some 15.9 percent of Scorpio's common shares, and Sprott Asset

Management, which controls about 19.6 percent of U.S. Silver

Gold shares and about 1.6 percent of Scorpio stock, have both

entered lock-up agreements and agreed to back the deal.

($1 = C$1.1315 Canadian)

(Reporting by Euan Rocha; Editing by Lisa Von Ahn)