Superior Production Growth with Fully Un-Hedged Precious Metals Exposure
Aug. 29, 2011
AuRico Gold Inc.
("AuRico") (TSX:AUQ) (NYSE:AUQ)
Northgate Minerals Corporation
("Northgate") (TSX:NGX) (NYSE-Amex:NXG) are pleased to announce that they have entered into a definitive acquisition agreement (the "Agreement") to create a new leading intermediate gold producer. The new company will have 5 operating gold mines, a sixth mine targeting production in 2012 and 3 gold development projects in
, three of the top global mining jurisdictions. The combined company is completely unhedged and offers full exposure to record gold and silver prices and an exceptional growth profile from approximately 475,000
gold equivalent ("Aue") ounces
this year to 730,000+
Aue ounces in 2013 (growth of approximately 54%). All figures in Canadian dollars, unless otherwise indicated.
Under the terms of the Agreement, AuRico will acquire all of the issued and outstanding common shares of Northgate on the basis of 0.365 AuRico common shares per Northgate common share. Based on both companies' 20-day volume weighted average prices on the Toronto Stock Exchange (TSX) ending on
August 26, 2011
, the exchange ratio under the offer represents a 45% premium to Northgate's shareholders.
"The combination of AuRico and Northgate will immediately position the combined company as a pre-eminent intermediate gold producer with peer leading growth", said
, President and CEO of AuRico. "The assets, projects and people in our two companies are highly complementary and we are excited about the many opportunities ahead for us to continue to deliver value to our shareholders."
, President and CEO of Northgate, added "This transaction gives Northgate shareholders a significant premium to market and an exciting opportunity to participate in a leading intermediate gold company. The Northgate team has worked hard to develop a highly successful business in
and we look forward to further value creation through our combination with AuRico."
AuRico Gold Pro Forma Highlights:
- Emergence of a new leading intermediate gold company with expected 2011 production of 475,000 Aue ounces 1 and peer leading growth of approximately 54% to 730,000+ 3 Aue ounces by 2013
- Large resource base of approximately 19 million Aue ounces (excluding copper)
- 2 cornerstone assets in Ocampo and Young- Davidson that alone have the potential to produce over 500,000 Aue ounces at lowest quartile cash costs
- Fully un-hedged exposure to record gold and silver prices generating significant free cash flows
- Strong balance sheet
- Experienced management team with a proven track record of building and operating mines; supported by highly qualified Directors
- Excellent platform for further consolidation, with a focus on the Americas
- Geopolitically diversified asset portfolio across three of the most attractive mining jurisdictions ( Mexico, Canada, and Australia)
- Enhanced market presence: AuRico and Northgate are covered by 15 analysts, and will have exceptional trading liquidity with listings on the TSX and NYSE
- Compelling revaluation opportunity driven by an attractive valuation, significant synergies, and a focused growth strategy
Current shareholders of AuRico and Northgate will own approximately 62% and 38% respectively
of the pro forma company. The Board of Directors of the combined company will include three nominees from Northgate.
The acquisition of Northgate by AuRico will be completed by way of a court approved plan of arrangement. The Agreement has been unanimously approved by the Boards of Directors of AuRico and Northgate. UBS Securities Canada Inc. provided a fairness opinion to the Board of Directors of AuRico and GMP Securities L.P. and Macquarie Capital Markets Canada Ltd. provided fairness opinions to the Special Committee and Board of Directors of Northgate.