Sabina shareholders back takeover by B2Gold

B2Gold launched in February a friendly bid for Sabina aimed at winning control of properties in the Back River Gold District, which contains some of the world’s highest-grade undeveloped gold projects.

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

Goose is expected to become Nunavut’s third operating mine in 2025, when it starts commercial gold production. The other two are run by Agnico Eagle.

“B2Gold’s involvement as an intermediate producer with greater financial capacity provides additional de-risking of the project and leaves Sabina shareholders with a meaningful stake in the combined company,” Sabina’s CEO Bruce McLeod said in the statement.

As an all-share-based transaction, the implied value of the offer is C$2.20 a share, or C$1.2 billion at Tuesday’s close.

As part of the deal, B2Gold is also acquiring Zhaojin Mining Industry’s 7.4% stake in Sabina, which deals a small blow to the Chinese company’s global expansion move. Zhaojin first approached Sabina in 2017, acquiring an initial stake for C$66 million. At the time, the firm’s 25 mines and smelting operations were located in China.

A year later, Zhaojin poured an additional C$12 million into Sabina by buying 7.8 million shares and said its intention was to take the Nunavut projects into production. In June last year, it invested an additional C$12 million in the Vancouver-based miner.

B2Gold, while also headquartered in Vancouver and listed on the Toronto Stock Exchange, doesn’t currently produce any gold in Canada. It has operations in Mali, the Philippines and Namibia and is exploring projects in Uzbekistan, Finland and Colombia.

B2Gold’s takeover of Sabina comes as the global gold sector is undergoing a free wave of mergers and acquisitions.

In late 2022, Yamana Gold agreed to sell itself to two Canadian rivals, Agnico Eagle Mines (TSX, NYSE: AEM), the third-largest gold miner, and Pan American Silver (TSX, NASDAQ: PAAS), for about $4.8 billion.

Newmont  (NYSE: NEM)(TSX: NGT), the world’s largest gold producer, offered in early February to buy Newcrest Mining (ASX, TSX: NCM), Australia’s largest gold miner, for the equivalent of $17 billion.

After a rejection, Newmont came back this week with a sweetened offer which, if successful, would lift Newmont’s gold output to nearly double its nearest rival Barrick Gold.