JOHANNESBURG (miningweekly.com) – Canada’s Teranga Gold would add a second West African gold project to its fold, announcing on Monday that it would buy Australia’s Gryphon Minerals, which owns the Banfora project in Burkina Faso.

The acquisition of Gryphon would position Teranga, which owned and operated the Sabodala gold mine, in Senegal, to grow its production by 50% to between 275 000 oz/y and 325 000 oz/y by mid-2019, said Teranga CEO Richard Young.

“Out of the gate, Gryphon's Banfora project will give us an additional one-million ounces in gold reserves, with considerable exploration potential to further increase the reserve base, which is expected to enhance our production, cost and cash flow profiles commencing as early as 2019.”

The acquisition would increase Teranga’s proven and probable reserve base by 35% to 3.7-million ounces.

Teranga would acquire Gryphon by way of a scheme of arrangement, which valued the Australian junior at about A$86-million, or A$0.206 a share. Under the arrangement, each Gryhon share would be exchanged for 0.169 common shares of Teranga, or 0.169 Teranga shares in the form of ASX-listed CHESS depository interests.

The consideration represented a 53% premium over the closing price of Gryhon shares on the ASX on June 17 and a 45% premium over the 20-day volume weighted average price ended on the same day.

“We are pleased to be joining forces with Teranga Gold as we look to create a pre-eminent West African midtier gold producer. This transaction gives an immediate uplift for Gryphon shareholders and provides significant exposure to Teranga’s Sabodala gold mine,” commented Gryphon MD Steve Parsons.

On a proforma basis, Teranga shareholders would own 85% and Gryphon shareholders would own 15% of the combined entity.

The Gryphon board had approved the transaction, which was still subject to other conditions, including shareholder approval, regulatory and court approvals and certain other conditions.

The transaction was expected to close in October.