Houston, Toronto Gold Firms Agree to $1.5-Billion Merger

Battle Mountain Gold Co. and Hemlo Gold Mines Inc. said Monday that they have agreed to a $1.5-billion stock-swap merger that will create North America’s fifth-largest gold producer.

The combined company will have nine mines producing gold in five countries and exploration programs in the Americas, the Western Pacific and West Africa, the companies said in a statement.

Production will be in excess of 1 million ounces of gold in 1996, and the merged company would have some of the lowest production costs in the North American gold mining industry, the companies said.

Under terms of the agreement, Hemlo Gold shareholders would be entitled to receive 1.48 Battle Mountain shares for each share of Hemlo Gold, equivalent to $15.36 per Hemlo Gold share, based on Monday’s closing price, which is a premium of about 20.4% to the market price.

Shares of Houston-based Battle Mountain were unchanged at $10.375 on the New York Stock Exchange. Shares of Toronto-based Hemlo were up 25 cents at $12.75 on the American Stock Exchange.

The merged organization would be called Battle Mountain Gold Co. and would be based in Houston. The companies said they expect to complete the deal by June 30.