Cambior Inc. said yesterday it would buy fellow Canadian gold miner Ariane Gold Corp. in a share-swap deal worth about C$60 million ($44 million), as it looks to build production levels through developing Ariane’s Camp Caiman project in French Guiana

Under the friendly agreement, Ariane shareholders will receive one Cambior share for every 2.91 Ariane shares, the companies said in a statement.

That works out to an implied price of C$1.32 for each Ariane share.

Shares of Toronto-based Ariane were up 18 Canadian cents at C$1.15 on the Toronto Stock Exchange early yesterday afternoon, while shares of Montreal-based Cambior fell 27 Canadian cents to C$3.56. Cambior operates Omai Gold Mines Limited here and is also managing bauxite operatons in Linden in preparation for a takeover.

“This is exactly the type of thing we we’re looking for. It’s an advanced exploration situation. It’s a nice deposit and good grade minable by open pit,” Cambior president and chief executive Louis Gignac said in an interview with Reuters.

Ariane’s principal asset is the Camp Caiman gold project, located some 45 kilometres (30 miles) southeast of Cayenne. Cambior said a preliminary assessment study has indicated the potential for an open pit mining operation averaging 96,000 ounces of gold a year over 10 years. Cambior expects that production could begin in 2007.

“It’s a logical acquisition for Cambior, they are familiar with this area of the world,” said Don Blyth, mining analyst for Paradigm Capital Inc.

“At first glance, it looks to be good, it looks to be accretive. More importantly, it does address the issue of Cambior’s production growth, with Omai coming off stream next year and the year after,” he said.

Cambior expects its production to jump to 700,000 ounces next year from 520,000 ounces this year, but analysts expect it to fall back to around 500,000 ounces when the Omai mine in Guyana is shut down.

Gignac said Cambior expects to be able to add to reserves at the Camp Caiman project through additional exploration. The company will need to spend C$3 million to C$5 million for exploration and a full feasibility study, he said.

“When it goes to full production, I think we’ve estimated a capital cost at between C$60 million and C$65 million,” Gignac said. “I think we can do that out of the current financial capacity.”

The share-swap deal will add to Cambior’s dilution as the company plans to issue about 16.3 million common shares. But Blyth said dilution was not a major concern in that deal.

“They are adding sort of 7 to 8 percent of the shares but they are increasing their resource base by a rough estimate of 14 percent,” he said.

Cambior has 211 million shares outstanding, while Ariane has 47 million shares outstanding on a fully diluted basis.

($1=$1.35 Canadian)