(Figures in Canadian dollars, unless specified) (Adds details on agreement, executive and analyst comments, stock prices)
TORONTO, Feb 5 (Reuters) - Centerra Gold Inc and Premier Gold Mines Ltd have formed a joint venture to develop Premier's Trans-Canada property in Ontario, including the advanced Hardrock gold project, the Canadian companies said on Thursday.
Centerra, which operates gold mines in Kyrgyzstan and Mongolia, will pay an initial C$85 million ($67.84 million) for a 50 percent stake in the partnership, and could contribute a total of C$300 million in cash.
"Initially we view this transaction positively since it represents a dilution of (Centerra's) Central Asian risk," TD Securities analyst Greg Barnes said in a note.
"With net cash of $328 million at the end of Q3/14, we believe that Centerra is well positioned to fund its development pipeline, particularly given the staged payments and capex for the Hardrock project."
Junior miner Premier, whose stock jumped as much as 15 percent after the partnership was announced, will contribute its 33,000 hectare property to the venture.
Centerra will contribute C$185 million to the partnership, with a portion funding a comprehensive technical and economic feasibility study, including an updated mineral resource calculation. Last year, the indicated resource at Hardrock was 4.87 million ounces of gold.
Centerra could contribute up to C$30 million more to the partnership, based on the updated resource results.
"The property has a large land package with exceptional exploration potential," said Centerra Chief Executive Ian Atkinson. "As we have stated in the past, it has been our goal to identify and acquire an additional production platform."
At mid-session, Centerra shares were 2.5 percent higher at C$7.68 on the Toronto Stock Exchange, while Premier shares gained 23 Canadian cents to C$2.27.
The transaction structure avoids diluting Premier's shareholder base, said Chief Executive Ewan Downie, a pitfall seen in recent financing deals. ($1 = 1.2529 Canadian dollars) (Reporting by Susan Taylor in Toronto and Narottam Medhora in Bengaluru; Editing by Simon Jennings and Grant McCool)