Canadian company Centerra Gold has signed an agreement to acquire US-based Thompson Creek Metals in a deal worth $1.1bn.

Thompson Creek operates the Mount Milligan mine in British Columbia, Canada.

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Together with Centerra’s Kumtor mine in the Kyrgyz Republic, the combined company is expected to be established as a low-cost gold producer.

In connection with the deal, Centerra also signed a letter with Royal Gold. This comprised Royal Gold’s 52.25% gold streaming interest at Mount Milligan being amended to a 35% gold stream and 18.75% copper stream upon completion of the deal.

Under the amended agreement, Mount Milligan’s revenue split to Centerra is expected to be roughly 70% gold and 30% copper.

"This will complement our Canadian-based Greenstone project and provide for further flexibility to expand into the Americas."

Centerra Gold CEO Scott Perry said: "The acquisition will establish an operating base in Canada, one of the lowest risk mining jurisdictions in the world, which will complement our Canadian-based Greenstone project and provide for further flexibility to expand into the Americas.

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"Furthermore, the amendment to the Royal Gold stream repositions the asset by maximising gold exposure for our shareholders."

The transaction will add Mount Milligan asset to Centerra’s portfolio and increase its production, reserves and resources.

Amendment of Royal Gold’s gold stream from 52.25% to 35% is set to reposition Mount Milligan as a mine with low pro forma 2016 AISC of $775oz-$850oz.

The addition of secondary crushing at the Mount Milligan Mine is expected to take place by the year-end and will increase production to more than 62,500tpd.

Thompson Creek president and CEO Jacques Perron said: "Following a formal strategic review process and the evaluation of numerous strategic alternatives to address Thompson Creek’s upcoming debt maturities, I am pleased to announce the business combination of Thompson Creek with Centerra.

"We believe the combination with Centerra represents a unique opportunity for our shareholders to gain exposure to additional high-quality assets with a strong development pipeline."