Centerra Gold to buy Thompson Creek Metals for $1.1b

Centerra Gold to buy Thompson Creek Metals for $1.1b

Gold mining company Centerra Gold Inc. (CSX:CE) has agreed to buy Thompson Creek Metals (TSX:TCM) for US$1.1 billion, solving issues both currently face.

Toronto-based Centerra Gold is looking to expand away from Kyrgyzstan, where it is dealing with a toxic political situation.

By acquiring Thompson Creek, Centerra will receive Mount Milligan, a large mine in British Columbia with 2.2 billion pounds of copper reserves and 5.7 million ounces of gold reserves. Meanwhile, Thompson Creek receives financial backing it is craving.

Denver-based Thompson Creek has more than $800 million in debt coming due between 2017 and 2019, so the company is looking for a purchaser.

Scott Perry, Centerra chief executive said: “This business combination is complementary in nature, combining Centerra’s robust balance sheet with Thompson Creek’s high-quality asset base.”

Thompson Creek’s share price has been destroyed by its debt issues and is offering just $175.8 million in stock. The debt assumption takes the value of the deal above $1 billion.

Mount Milligan is anticipated to produce up to 270,000 ounces of gold and 65 million pounds of copper this year. Centerra fully relies on the Kumtor mine in Kyrgyzstan for its cash flow. Kumtor generated 536,920 ounces of gold last year.

Centerra also announced it will raise $170 million in bought deal financing. The cash will be used to pay off some of Thompson Creek’s debt.