Silver Standard Resources has signed an agreement to acquire Canadian-based Claude Resources.
The offer values Claude Resources at C$337m ($252m) in total. The transaction is expected to create an intermediate precious metals producer with assets in the Americas.
Once the transaction concludes, the existing shareholders of Silver Standard and Claude Resources will own about 68% and 32% of the new company, respectively.
The combined company is expected to produce about 390,000 gold equivalent ounces at cash costs of about $735 per equivalent ounce of gold sold.
According to Silver Standard, the deal will also offer increased free cash flow generation and improved financial flexibility.
As part of the transaction, safe underground and open pit mining skills would be brought together to realise portfolio growth as well as exploration opportunities.
The new company will serve as the new owner of the Claude Resources’ wholly-owned Seabee gold mine located in Saskatchewan.
Silver Standard Resources president and CEO Paul Benson said: "The addition of the Santoy and Seabee mine complexes to our operating portfolio demonstrates our disciplined acquisition strategy to deliver growth and value to our shareholders.
"We also acquire a large underexplored land position with significant exploration upside."
Claude Resources president and CEO Brian Skanderbeg said: "Our long-term production profile, free cash flow, strong balance sheet and significant exploration potential are a great addition to Silver Standard’s portfolio of producing mines and development projects, and we are excited that we can share in the growth opportunities that exist going forward."
Image: The combined company will be the new owner of the Seabee gold mine in Saskatchewan. Photo: courtesy of Claude Resources Inc.