Financial Post Rio Alto Mining 43% premium for Sulliden is not cheap

The Financial Post reports in its Thursday edition merger and acquisition activity continues to pick up in the mining space, as small miners Rio Alto and Sulliden Gold are joining in an all-stock deal that combines similar assets located next to each other. The Post's Peter Koven writes that for Rio Alto, the deal is not particularly cheap. Rio Alto agreed to pay a 43-per-cent premium for Sulliden, which values the company at roughly $300-million. Rio chief executive officer Alex Black promised investors he would create value out of the transaction "by performing," he said on a conference call. "A big proportion of my net worth is in Rio Alto. I'm not going to screw around with my investment and put that at jeopardy by making stupid decisions. This is a great decision for me as a shareholder, and therefore for every shareholder." Rio Alto owns the La Arena gold mine in Peru. Just 30 kilometres away, Sulliden is trying to develop the Shahuindo project. Mr. Black claimed the two projects are virtually carbon copies of each other, as they have similar geology and use similar mining and processing methods. That means there should be plenty of synergies, and gold production of roughly 300,000 ounces a year.