TORONTO, April 13 (Reuters) - Gran Colombia Gold (GCM.TO: Quote), a Canadian gold miner focused on Colombia, said on Wednesday it had agreed to acquire slightly smaller rival Medoro Resources (MRS.TO: Quote) as the companies join forces in the Andean nation.
Under the terms of the all-stock deal, Medoro shareholders are to receive 1.20 common shares of Gran Colombia, plus 0.50 of a Gran Colombia common share purchase warrant for each Medoro share.
Each whole warrant is exercisable to buy one common share of Gran Colombia at C$2.60, and will expire on Aug. 24, 2015.
Upon completion of the transaction, Gran Colombia shareholders will hold about 56 percent of the pro forma company, while Medoro shareholders will hold about 44 percent. The new company will have a combined market capitalization of over C$1 billion, the firms said.
Medoro and Gran Colombia are among a host of miners, many of them Canadian-based, that are part of the rush to develop Colombia's gold resources.
The South American country is attracting a wave of foreign investment following a return to political stability after years of guerrilla warfare and internal strife.
Medoro and Gran Colombia each agreed not to solicit any alternative transactions and to pay the other a break fee of $12 million in certain circumstances.
Gran Colombia's financial adviser is GMP Securities LP. Medoro's is Fraser Mackenzie Ltd.
Medoro recently outlined a nearly 10 million ounce resource at its open-pit Marmato gold-silver project, located about 200 km (125 miles) east of Colombia's Pacific Coast.
Gran Colombia acquired Colombia's Frontino Gold Mines Ltd in August last year.
Gran Colombia shares fell 1.26 percent on Wednesday to C$1.57 in Toronto, before the deal was announced. Medoro Resources rose 1.92 percent to C$2.12.
