AuRico Gold, formally known as Gammon Gold, and Northgate Minerals announced they have entered into a definitive acquisition agreement to create a new leading intermediate gold producer. The new company will have five operating gold mines, a sixth mine targeting production in 2012, and three gold development projects in Mexico, Canada and Australia, 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 oz this year and growing to 730,000 gold equivalent oz in 2013.
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 Rene Marion, 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.”
AuRico Gold’s three operating properties in Mexico include the Ocampo mine in Chihuahua State, the El Chanate mine in Sonora State and the El Cubo mine in Guanajuato State. Northgate currently owns and operates the Fosterville and Stawell gold mines in Victoria Australia, and is building the Young-Davidson gold mine in northern Ontario, which is targeting a 15-year mine life with average annual production of 180,000 oz of gold commencing in 2012.