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Gold/Mining/Energy : Francisco Gold - FGX.V -- Ignore unavailable to you. Want to Upgrade?

To: Elizabeth Andrews who wrote (1819)	3/7/2002 2:56:39 AM
From: Paul-D	Respond to of 1907

07 Mar 2002 00:55 UPDATE 2-Canada's Glamis to merge with Francisco Gold (Updates stock prices in last two paragraphs) By Lesley Wroughton TORONTO, March 6 (Reuters) - In Canada's second small-cap gold merger in less than a month, Glamis Gold Ltd. <GLG.TO> and Francisco Gold <FGX.V> agreed on Wednesday to join forces in a C$196 million ($124 million) deal as market interest returns to the industry. With prospects of a comeback in the gold price after two decades of decline and bankers eager again to finance gold firms, small miners were revisiting opportunities to expand through mergers, analysts said. Last month Miramar Mining Corp. <MAE.TO> and Hope Bay Gold <HGC.TO> agreed to merge to strengthen their profiles in the Canadian North where they have operated for some years. The Glamis-Francisco union combines key assets in jurisdictions in Central America and Mexico and increases Glamis's total reserves by over 50 percent to 5 million ounces of gold. Glamis, whose goal is to be a 500,000 ounce producer, was expected to produce 255,000 ounces of gold in 2002 at a total cash cost of $172 per ounce, with the biggest production and reserve growth coming from its Marigold mine in Nevada. It also owns the San Martin mine in Honduras, Cerro San Pedro project in Mexico, the Cerro Blanco deposit in Guatemala, and the Viento Frio exploration project in Panama. Francisco owns the El Sauzal gold deposit in southwestern Chihuahua State -- the largest open-pitable gold deposit in Mexico -- and is actively exploring in western Guatemala where it recently made the Marlin gold discovery. Under the agreement, Glamis is offering to exchange 1.33 of its common shares and 1 share in a new exploration company ExploreCo for each issued Francisco share. Francisco will transfer to ExploreCo C$25 million in cash, some early-stage Nicaraguan assets and a 2 percent smelter return royalty on its Guatemalan projects outside Marlin area. Glamis will retain the right to acquire a 5 percent stake in ExploreCo. The deal is expected to be completed on May 15. "This is not pressure to consolidate but about timing, market conditions are right, all ingredients about bringing in assets and unlocking their value... about sheer fundamental growth," said one Toronto-based analyst. He said the merger also elevated Glamis as a potential consolidation target for bigger North American miners like Barrick Gold <ABX.TO> and Placer Dome <PDG.TO>. "It puts them clearly in a realm that will make meaning for pretty much any major gold company," the analyst said. The companies said their boards had both unanimously approved the deal. If Francisco receives a superior offer, it will pay Glamis a break fee of C$8.6 million. The companies said the transaction would immediately add to net asset value and that recoverable gold reserves would increase by about 34 percent on a per share basis. Despite a favorable reaction among analysts, Glamis shares closed down 32 Canadian cents at C$7.48 on the Toronto Stock Exchange in response to its proposed 25.7 million share offer. The shares have risen 30 percent since the start of the year. Francisco stock roared ahead, closing up C$4.30, or 50 percent, at C$12.80 on the Canadian Venture Exchange after hitting a new 52-week high of C$12.95 earlier in the day. ($1=$1.58 Canadian) ((Reuters Toronto newsroom +416-941-8101, toronto.newsroom@reuters.com))