Leagold Mining has completed the acquisition of the Los Filos Gold Mine in Guerrero state, Mexico, from Goldcorp for $350m.
Under the agreement, Leagold will pay $279m in cash and the remaining $71m will be issued in common shares as consideration.
Los Filos operations consist of two open-pit mines, Los Filos and Bermejal, as well as an underground mine. There is also an opportunity to develop a new underground mine at Bermejal as an expansion project.
Last year, Los Filos produced 231,000oz of gold at an AISC/oz of $878.
Leagold Mining CEO Neil Woodyer said: “Today marks a strong beginning for Leagold with the Los Filos mine becoming our platform for growth. We have transformed into a low-cost gold producer in Mexico and we will immediately focus on optimising the mine and progressing the drilling programmes and related preparation work for the development of a new underground mine at Bermejal.
“We look forward to working with the Los Filos management team, the Los Filos workforce, and our local community partners as we develop and expand Los Filos for long-term success.
“In addition, we continue our search for additional acquisition and growth opportunities in Latin America, as we seek to grow into a multi-mine operator and create the next intermediate gold producer.”
To fund the acquisition, Leagold’s financing plan totalled $333m, which includes C$179.1m ($133m) subscription receipt offering that was completed on 8 March and the exercise of the over-allotment option for 1.5 million common shares granted to the underwriters, which was exercised on Friday. This is in addition to a $150m loan facility and $50m equity private placement being provided by a fund managed by Orion Resource Partners (Orion).
The Mexican anti-trust commission (COFECE) has approved completion of the acquisition, but required a second COFECE application with regard to a portion of Orion’s $50m equity investment.
For this, $50m was split into a $21m private placement that has been completed and a $29m subscription receipt financing, with each subscription receipt converting into one common share, without payment of further consideration upon receipt of the second COFECE approval.
For the cash funding deferral, Goldcorp also agreed to defer $29m of the $279m by accepting a short-term promissory note from Leagold.
Following receipt of the second COFECE approval, $29m in proceeds from the Orion subscription receipt financing was paid to Goldcorp.
Net proceeds from the various financings completed have been used to satisfy the $250m cash portion of the Los Filos Mine acquisition paid to Goldcorp and to use for general working capital purposes.
In addition, the company has informed that Goldcorp’s EVP corporate development and CFO Russell Ball has joined Leagold Mining’s board of directors.
A Vancouver-based company, Leagold intends to become a mid-tier gold producer by focusing on South American mining assets.