Thompson Creek Metals Co., a debt-strapped Littleton miner, will be acquired by Toronto mining company Centerra Gold Inc. in a $1.1 billion deal.
The cash and stock transaction includes the assumption of nearly $900 million in debt that Thompson Creek has accumulated building Mount Milligan, a copper and gold mine in central British Columbia. The company also has struggled against falling metal prices.
Thompson Creek shares have dropped 95 percent since December 2010.
“Following a formal strategic review process and the evaluation of numerous strategic alternatives to address Thompson Creek’s upcoming debt maturities, I am pleased to announce the business combination of Thompson Creek with Centerra,” Thompson Creek CEO Jacques Perron said in a statement. “We believe the combination with Centerra represents a unique opportunity for our shareholders to gain exposure to additional high-quality assets with a strong development pipeline.”
Thompson Creek shareholders still must approve the transaction, which is expected to close in the fall. Centerra shareholders will own about 92 percent of the company.
Thompson Creek was valued at about $110 million Tuesday before the acquisition was announced and trading was halted on the Toronto Stock Exchange.
Each Thompson Creek share will be exchanged for about a tenth of a Centerra share, the companies said Tuesday. The ratio represents a 32 percent premium on Thompson’s Monday closing price. Centerra also will redeem $899 million in Thompson Creek bonds plus interest. It will also acquire $47 million in capital lease obligations.
The deal comes as Centerra is looking to expand its hold in North America. As part of the agreement, Centerra would gain control of Mount Milligan. It would also take in Thompson Creek’s two molybdenum mines in Idaho and British Columbia, as well as a molybdenum conversion plant in Pennsylvania.
Demand for molybdenum, a chemical element used to harden steel, has dropped as construction and the oil and gas industry have slowed. Freeport-McMoRan in December said it .
Denver-based royalty company Royal Gold Inc., a stakeholder in Mount Milligan, said in a statement that it supported the transaction. It will amend its stream agreement, which is a contract to purchase all or a portion of metals from a mine at a preset price, in exchange for an upfront deposit. Royal Gold’s gold streaming interest at Mount Milligan will be amended from 52.25 percent gold to a 35 percent gold and 18.75 percent copper.
Royal Gold said it estimates the amendment to be “value neutral.”
