Canadian gold and silver producer Primero Mining has received approval from the Federal Court of Australia for its C$119m ($118.7m) acquisition of precious metals exploration company Cerro Resources.

The court decision provides Primero with access to Cerro Del Gallo project – a Cerro Resources’ gold and silver project in Mexico.

The Cerro Del Gallo gold-silver deposit has nearly one million ounces of gold equivalent proven and probable reserves and 2.3 million ounces of gold equivalent measured and indicated resources.

Under the terms of the acquisition, Primero will acquire all the issued and outstanding ordinary shares of Cerro Resources on the basis of 0.023 of a Primero share for each Cerro share.

All Cerro’s non-Cerro del Gallo assets will be spun out to Cerro’s wholly owned subsidiary Santana Minerals.

A new company will be created to retain Cerro’s non-Cerro del Gallo projects and interest.

The present shareholders of Cerro will receive 80.1% of the ordinary shares in the new company, and Primero will receive a 19.9% stake with anti-dilution rights for two years.

In December 2012, Primero entered into a definitive agreement with Cerro to acquire all of the issued and outstanding common shares of Cerro.

The acquisition is expected to close later this month.

Image: Cerro Del Gallo comprises about one million ounces of gold equivalent proven and probable reserves. Photo: Courtesy of Bertrand Rieger / Corbis.

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