New Gold snaps up Richfield Ventures Tuesday, 05 April 2011 13:40 New Gold has agreed to buy out Canadian junior mining company Richfield Ventures for around CAD 550.00 million (USD 570.08 million) under a scheme of arrangement.
The British Columbia-based buyer will settle the consideration in shares, with each target share valued at CAD 10.38. The offer represents a 30.9 per cent premium over the unaffected CAD 7.93 close on 1st April.
Richfield stock rose 25.1 per cent to CAD 9.92 by the end of 4th April.
The deal gives New Gold the Blackwater gold asset in the province of British Colombia with 1.83 million ounces of indicated mineral resources and 2.34 million ounces of inferred mineral resources, as well as tax savings.
Richfield shareholders will receive a premium on their investment and a continuing interest in projects through their stock in the acquiror.
The boards of both parties have unanimously approved the move, which is expected to complete around late May to early June.
Randall Oliphant, chairman of New Gold, said: “[Blackwater] is an exciting gold project that we anticipate could significantly increase our gold production base at competitive cash costs in the years ahead.”
The asset is a bulk-tonnage development of 23,670 hectares. Silver Quest Resources holds a 25.0 per cent stake in the northern claims, with Richfield owning the remaining area.
New Gold is already present in British Columbia through its New Afton project, which has an expected annual production of 85,000 ounces of gold, 75.00 million ounces of copper and 0.21 million ounces of silver.
The Vancouver-based company said it plans to use funds generated at the property to continue exploring Blackwater before developing it and, finally, beginning production.
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