B2Gold to buy Sabina Gold & Silver for $1.1B

Canada’s B2Gold (TSX: BTO; NYSE: BTG) is buying fellow precious metals miner Sabina Gold & Silver (TSX: SBB; US-OTC: SGSVF) in an all-stock deal worth $1.1 billion (US$824 million).

The transaction hands B2Gold the Back River Gold district property in Nunavut, which holds multiple high-potential mineralized zones poised to boost the Vancouver-based gold giant’s reserves.

The most advanced project in the area, situated about 520 km northeast of Yellowknife, is Sabina’s Goose gold, which is fully permitted and construction ready.

Goose is expected to become Nunavut’s third operating mine in 2025, when it starts commercial production. The other two are run by Agnico Eagle Mines (TSX: AEM; NYSE: AEM).

It is also slated to average 223,000 oz. of gold annually over a 15-year life of mine from 3.6 million oz. of mineral reserves averaging 5.97 grams gold per tonne. This makes it one of the highest-grade gold development projects in the world. 

“We are confident that the district has strong untapped upside with numerous avenues for resource growth,” B2Gold chief executive officer Clive Johnson said in a statement.

The B2Gold team has experience building mines in the Arctic, as it set the Julietta and Kupol mines in Russia via B2Gold predecessor company, Bema Gold. The miner said it sees potential to increase Goose’s production in first five years of the mine life through accelerated development of the underground section.

It also expects to complete optimization studies, which could improve long-term economics by allocating more capital up-front.

Major resources boost

The acquisition increases B2Gold’s reserves by 66% to 9 million ounces and its measured and indicated resources by 52% to 18.5 million ounces.

Under the terms of the deal, B2Gold will issue 0.3867 of a common share for each Sabina common share held, equivalent to a value of $1.87 a share. The figure represents a 45% premium to Sabina’s closing price on the Toronto Stock Exchange as of Feb. 2, the date the non-binding letter of intent was signed.

The boards of both miners have unanimously approved the deal and Sabina’s directors have recommended its shareholders to vote in favour of the transaction.

B2Gold, which is due to report its full-year 2022 results on Feb. 23, operates mines in Mali, Namibia and The Philippines.

The announcement comes only a week after the world’s largest gold producer, Newmont (TSX: NGT; NYSE: NEM), confirmed it had approached Australia’s no. 1 miner of the yellow metal, Newcrest Mining (TSX: NCM; ASX: NCM), with a US$17-billion takeover offer.