TORONTO (miningweekly.com) – Canadian junior B2Gold has signed a binding agreement to buy Toronto-based Central Sun Mining in an all-share transaction that values Central Sun at C$66,8-million based on closing prices on January 30.

B2Gold will pay 1,28 of its own shares for every Central Sun share, which represented a 45% premium over the firms' closing prices on the last day before the transaction was announced.

The transaction will provide B2Gold, which is exploring on properties in Colombia and Russia, with operating cash flow, from Central Sun's 45 000-oz/y Limon mine, in Nicaragua.

The firm's production will also increase to around 130 000 oz/y, when a second mine, Orosi, starts up in the fourth quarter of this year.

Central Sun had planned to convert the operation to conventional milling to increase gold output, but the project was put on hold last year because of cash constraints and difficulties in raising the necessary funds.

B2Gold has C$55-million in cash and cash equivalents, which is enough to cover the capital expenditure needed to bring the Orosi mine into production by year-end, and to sustain production levels of 130 000 oz/y thereafter, the company said.

Central Sun will issue a convertible debenture of up to C$10-million to B2Gold, and will use the proceeds to fund immediate working requirements and development spending at the Orosi mine.

If the takeover does not succeed, the debenture will be repayable within 30 days of the termination.

Central Sun's board has unanimously recommended that shareholders vote in favour of the B2Gold transaction, and officers, directors and shareholders holding about 13,5% of the company have entered into lock-up agreements, the firms said.

The B2Gold offer trumped an earlier tie-up plan proposed by Central Sun and fellow Canadian Linear Gold. However, Linear said last week that it would not exercise its right to match the higher offer, as it did not want to be drawn into a bidding war.

"We are pleased to have signed this agreement, which has received enthusiastic market support and upon completion will immediately transform B2Gold into a producing gold company,” said B2Gold president and CEO Clive Johnson.

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