Argonaut Gold Inc. (TSX:AR) has entered into a $341 million agreement with Vancouver-based Prodigy Gold Inc. (TSX.V:PDG) to buy all of Prodigy's outstanding common shares.
"[Prodigy's open-pit gold mine] Magino is a highly attractive asset which has shown continued resource growth, and which we believe will provide a longer term production opportunity for Arogonaut Gold shareholders," said Pete Dougherty, president and CEO of Nevada-based Argonaut Gold.
"The Magino resource provides substantial flexibility for maximizing value creation using a higher grade cut-off.
"We believe the project can be 'right-sized' for a company like Argonaut Gold to deliver the best returns to our shareholders, while providing further upside should the gold price maintain its strong performance."
The combined entity will be owned approximately 22% by current Prodigy shareholders and 78% by current Argonaut shareholders.
The arrangement provides for certain standard conditions including the receipt of approval from shareholders. Shareholders' meetings for both companies to vote on the approval are expected to be held in December.
The Magino mine is located approximately 40 km northeast of Wawa, Ontario.
