Goldcorp Buys Gold Eagle Mines For $1.5B

August 2, 2008 2:56 p.m. EST

Vancouver, British Columbia (AHN) - Vancouver-based Goldcorp Inc. will buy Toronto-based Gold Eagle Mines Ltd. for $1.5 billion.

Goldcorp's move will position the mining giant as the leading operator in the Red Lake district in northwestern Ontario. The acquisition of Gold Eagle will bring to one million ounces Goldcorp's annual production output in the Red Lake mines.

Shareholders of Gold Eagle will receive either a cash payment of $13.60 for every share, 0.292 Goldcorp share per Gold Eagle share or a combination of the two.

The value of the deal is 36 percent more than Gold Eagle's weighted average price for the past 20 days. Takeover is expected sometime September after all shareholder and regulatory approvals have been obtained.

Gold Eagle owns the Bruce Channel gold discovery, which is near to Goldcorp's Red Lake gold mine and southwest of Goldcorp's Cochenour-Willans mine. Goldcorp also owns 51 percent of the Rahill-Bonanza zone, which is between the existing mines and the Gold Eagle acquisition.

Bruce Channel is expected to be operational in the next few years and will generate 300 jobs.