TORONTO (miningweekly.com) – Precious metals producer Primero Mining on Wednesday announced that it had closed the $220-million friendly takeover of rival Brigus Gold, heralding the birth of a new North American midtier miner, with operations in Ontario and Mexico.

The deal gave Primero control of Brigus' wholly owned Black Fox mine and mill, and adjoining properties, Grey Fox and Pike River, in the Timmins gold district of Ontario.

After issuing 41.34-million shares as payment to the former Brigus shareholders, Primero now had 157.17-million common shares issued and outstanding. A further 2.72-million common shares were reserved for new Primero options issued to the former option holders of Brigus under the arrangement.

"The closing of the Brigus transaction transforms Primero into a diversified, Americas-based midtier gold producer with a pipeline of growth projects. Primero now has two producing mines with a critical production scale of about 250 000 gold-equivalent ounces in 2014 at below average costs,” Primero president and CEO Joseph Conway said.

Primero now has a peer-leading growth profile as output was expected to rise to about 400 000 gold-equivalent ounces by the end of 2016, boosted by the current expansion project at the San Dimas mine, in Mexico, and the potential output from the Cerro del Gallo gold/silver/copper mine, also in Mexico, should the company make a positive construction decision by mid-2014.

The Black Fox mine provided Primero entry into a historic and prospective gold belt and is expected to leverage the company’s technical expertise in underground mining.

“Our balance sheet remains strong and our market capitalisation and liquidity have improved, providing exposure to a broader group of investors,” Conway added.

Former Brigus shareholders were also recently granted 90.1% of the ordinary shares of the newly incorporated Fortune Bay Corp, which took ownership of Brigus' non-Ontario interests, including the Goldfields project, in Saskatchewan, and the Ixhuatán and Huizopa projects, in Mexico.

Meanwhile, Primero in a separate statement said that ongoing exploration efforts at its San Dimas mine had lifted the compliant proven and probable gold reserves by 32% year-over-year, to 870 000 oz, at a 23% higher grade. Measured and indicated resources rose 28% over year-end 2012 to 997 000 oz, including the mineral reserves.

As at December 31, 2013, the company reported adding 311 000 oz of gold to the proven and probable reserves at San Dimas, before depleting 102 000 oz during the year. This equated to replacing the 12-month gold depletion by 305%.

SECONDARY SHARE OFFERING

Further, in a third news release on Wednesday, Primero announced that it had agreed with 19.8% shareholder Goldcorp and Canaccord Genuity, on behalf of a syndicate of underwriters, to sell Goldcorp’s 31.15-million Primero common shares on a bought-deal basis at an offering price of C$7.20 a share.

"The divestiture of our Primero share position is consistent with our long-term strategy of portfolio optimisation. We have valued our association with Primero. We congratulate the team on their impressive accomplishments and wish them every success in the future,” Goldcorp president and CEO Chuck Jeannes said.

Goldcorp will not own any common shares of Primero following completion of this offering, and Primero would not receive any proceeds from this offering. Goldcorp will pay all of the expenses of the offering.