OceanaGold buys Canada's Romarco, gaining access to US mine

OceanaGold acquires Canada's Romarco to become 'world's cheapest gold producer'

By Suze Metherell

July 31 (BusinessDesk) - OceanaGold Corp, the Australian gold miner, has acquired Canada's Romarco Minerals for a 73 percent premium, in a bid to become the world's cheapest gold miner.

The Melbourne-based, NZX-listed gold miner will pay Romarco shareholders 0.241 OceanaGold shares, or about 68 Canadian cents, for each Romarco share, the companies said in a joint statement. That implied C$856 million in equity value, and represents about a 73 percent premium to the 39.5 cents Romarco stock last traded at on Wednesday. It has since jumped some 32 percent to 52 cents.

Upon completion, OceanaGold shareholders will own 51 percent of the combined company with Romarco shareholders owning the remaining 49 percent.

The Toronto-based miner's principal asset, the Haile Gold Mine in South Carolina in the US, is an under-construction, high-grade open pit project. The acquisition comes after OceanaGold entered into an agreement with Newmont Mining Corp in April to buy its Waihi gold mine for US$101 million, increasing its exposure to New Zealand's resources sector.

"The combination of OceanaGold and Romacro is expected to create the lowest cost gold producer in the market; propelled by a long reserve life, a portfolio of high quality assets that generate significant free cash flow and a solid pipeline of organic growth opportunities," the companies said.

The gold producer expects to produce 540,000 ounces of gold annually by 2017, with 75 percent to come from New Zealand and the US, at an all-in cost of less than US$600 per ounce.

Separately, OceanaGold announced profit dropped to US$23.5 million in the six months ended June 30, from US$56.8 million a year earlier. Revenue slid to US$43.8 million from US$63.6 million.

OceanaGold shares last traded at $3.15 and have fallen 6.9 percent over the past 12 months.

(BusinessDesk)

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