TORONTO - Iamgold Corp. (TSX:IMG) has reached a friendly $608-million deal to buy Trelawney Mining and Exploration Inc. (TSXV:TRR), a junior company with several gold properties in northern Ontario.
Under the deal, Iamgold will pay $3.30 in cash for each share in Trelawney, which is primarily focused on the development of the Cote Lake Deposit in northern Ontario.
Trelawney shares closed up 95 cents or about 41 per cent at $3.27 on the Toronto Stock Exchange on Friday.
"The acquisition of Trelawney creates a larger and more geographically balanced portfolio of long-life gold assets for Iamgold," Iamgold president and chief executive Stephen Letwin said in a statement.
"This transaction provides an accretive return on invested capital as we are effectively redeploying the cash proceeds from the sale of non-core assets last year into a Canadian gold project that significantly strengthens our future gold production profile."
Iamgold sold its stake in two gold mines in Ghana last year to Gold Fields Ltd. for US$667 million.
Trelawney's Cote Lake Project, between Timmins and Sudbury, Ont., has an estimated 930,000 ounces of gold in indicated resources and 5.94 million ounces of inferred resources.
Iamgold's offer to purchase Trelawney will require approval by a two-thirds majority shareholder vote in addition to other regulatory and court approvals.
Shares held by Iamgold and shareholders who have agreed to voting arrangements, including Trelawney management and the board of directors, represent approximately 13.3 per cent of the current shares outstanding.
The agreement includes a $21-million break fee payable to Iamgold under certain circumstances if the deal is not completed.
Iamgold has operations in West Africa, South America and Canada.
The company's two largest operations are the Rosebel mine in Suriname and the Essakane mine in Burkina Faso.
Shares in Iamgold fell 16 cents to $12.26 on the Toronto Stock Exchange.