Goldcorp buying Virginia Gold Mines in all-stock deal

Goldcorp Inc. said Monday it has inked a deal to buy Quebec City-based Virginia Gold Mines Inc. in an all-stock deal.

Shares of Virginia Gold Mines rose more than 24 per cent on Monday after Goldcorp Inc. said it has inked a deal to buy the Quebec City company in an all-stock deal.

The key to the deal is the Eleonore gold project, which was discovered in 2004 in the James Bay region of Quebec. Goldcorp (TSX:G) said its takeover bid values Eleonore at $420 million US.

For each share of Virginia Gold (TSX:VIA) they hold, investors will get 0.4 of a Goldcorp share along with one-half of a share in a new public exploration company, New Virginia.

Investors responded by sending Virginia Gold shares up $2 to $10.30 in heaving trading on the TSX. Goldcorp was down 20 cents at $23.58.

"Eleonore is a unique and significant property located in the core of what Goldcorp believes is one of the most promising new gold districts in North America," said Ian Telfer, the president and CEO of Vancouver-based Goldcorp.

Telfer said Goldcorp plans to continue aggressive exploration and development on Eleonore.

"All of us at Virginia wanted to see Eleonore developed by a qualified and experienced mine development team and Goldcorp with their Canadian expertise is without any doubt one of the best in the industry," said Andre Gaumond, the president of Virginia Gold.

The deal is expected to close in the first quarter of 2006.