Prodigy Gold Inc. (PDG.V) announced yesterday they agreed to merge with Argonaut Gold Inc. (AR.TO), whereby Prodigy shareholders will receive 0.1042 shares of Argonaut Gold and C$0.00001 in cash per share of Prodigy Gold.
At Argonaut’s current share price of C$9.65, this implies a value of C$1.00 per Prodigy share, for a total consideration of C$294 million. This means the Prodigy shareholders receive approximately C$48.20/oz in the gound, which is a very fair offer. By accepting this offer, Prodigy shareholders will gain exposure to Argonaut’s operating expertise and strong operational cash flow, as Argonaut expects to produce approximately 100,000 ounces of gold this year.
We have been following the developments at Magino for more than two years now, and are happy to see the shareholder value increased considerably over those years.
We agree on the terms of this merger and would recommend to accept the offer, or to sell the shares on the open market. We cannot rule out the possibility of a higher offer from another company. Our sources confirmed Osisko Mining Corp. (OSK.TO) is looking to add more projects to their existing portfolio and Prodigy’s Magino might fit their bill as it’s a Canadian project with in excess of 6 million ounces of gold.
Read the full press release here (pdf)
Disclosure: The author has a position in Prodigy Gold Inc. and will sell half of the shares on the open market. Please see our disclaimer for current positions.
