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After much speculation surrounding B2Gold’s (BTO:TSX) current M&A mandate, Clive Johnson has pulled the trigger on a relatively small acquisition; agreeing to buy Volta Resources (VTR:TSX) and their Kiaka gold deposit in Burkina Faso for shares with a total deal value of $63 million.  BTO has agreed to purchase VTR using their shares in an exchange ratio of 0.15 BTO shares for each VTR share which puts a value at approximately $0.42 per share on VTR, representing a 106% premium.  The deal will cost BTO roughly 3.4% dilution and will bring their total share count up to 675 million.

The Kiaka deposit is a low grade bulk tonnage gold deposit.  The deposit hosts 4.86 million ounces of gold at an average grade of 0.99g/t gold.  In a 2012 Pre-Feasibility study, the project is set to produce 340,000 ounces per year over a 10 year mine-life at an average cash cost of $671 per ounce.  Given the current gold price environment, the $610 million price tag for the mine makes the deposit’s economics questionable.

Clive Johnson, President and CEO of B2Gold, stated: "This acquisition significantly enhances our gold leverage with the addition of the Kiaka gold project. Kiaka is a significant, high-quality and well-defined resource with low technical risk that adds to our portfolio an asset with the potential to contribute meaningfully to B2Gold's already impressive future production growth profile. Our team has looked at many projects over the last several years and Kiaka stood out as a technically strong asset with low technical risk that in the appropriate gold price environment could be one of B2Gold's largest sources of future gold production. We look forward to working with Volta's experienced management and technical team to further advance the Kiaka gold project."

Although the project is a low grade one which indicates the necessity of a stronger gold price to make it economic, the deposit does have a higher grade core of roughly 3 million ounces with an average grade of over 1.5g/t gold.  This could allow BTO to build a smaller mine for significantly less capex and could be economic in the current gold price environment.

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Although this transaction is a share-based deal, which BTO shareholders are likely to be unhappy with in the short-term, we view this deal as positive as it offers them the potential to double their current production (guiding 360-380,000 ounces of gold production in 2013) for a total acquisition cost of only $63 million.  BTO is paying roughly $13 per Measured and Indicated ounce and $10.75 per total resource ounces (including inferred).  The team at BTO is known for having one of the best due diligence processes in the industry and so I’m sure they have a plan for this deposit outside of simply waiting for the gold price to improve.

The two companies will be hosting a conference call today at 8:30am PST at the below information:

Vancouver and toll-free: 1-866-223-7781

Toronto: 416-340-2218

Read: B2Gold Agrees to Acquire Volta Resources

Related: Clive's Tribe: Why B2Gold's Prospects are up in an Era of Writedowns