Superior Production Growth with Fully Un-Hedged
Precious Metals Exposure
TORONTO,
Aug. 29, 2011 /PRNewswire/ -
AuRico Gold Inc. ("AuRico") (TSX:AUQ) (NYSE:AUQ) and
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 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 475,0001
gold equivalent ("Aue") ounces2 this year to
730,000+3 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
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."
Richard Hall,
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 Canada and Australia 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 ounces1 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% respectively4 of the
pro forma company. The Board of Directors of the combined company
will include three nominees from Northgate.
Transaction Summary:
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.
The transaction is subject to approval by 66 and
2/3% of the votes cast by holders of Northgate common shares at a
special meeting of Northgate shareholders expected to be held in
October. The transaction is also subject to obtaining approval by a
majority of votes cast by the shareholders of AuRico at a special
meeting of AuRico shareholders expected to take place on the same
date as the Northgate meeting, as well as certain other customary
conditions. Closing of the transaction is expected in October. The
Agreement includes customary deal protection and non-solicitation
provisions including reciprocal break fees, right to match and
fiduciary-out provisions.
On August 28,
2011, the Board of Directors of Northgate determined that
AuRico's proposal to enter into the Agreement is a "superior
proposal" for the purposes of the arrangement agreement between
Northgate and Primero Mining Corp ("Primero") previously announced
on July 13, 2011 (the "Primero
Agreement"). Northgate's Board provided notice of that
determination to Primero. On receiving this notice, Primero waived
its "right to match" the proposal by AuRico. Accordingly, as per
the terms of the Primero Agreement, Northgate has paid a
termination fee of $25 million to
Primero and the Primero Agreement has been terminated. The meeting
of Northgate shareholders currently scheduled for September 21, 2011 has been delayed to a later
date which is expected to be in October, 2011, at which Northgate
shareholders will be asked to approve the transaction with
AuRico.
Advisors and Counsel
AuRico has retained UBS Securities Canada Inc.
to act as financial advisor and Fasken Martineau to act as legal
advisor.
Northgate has retained GMP Securities L.P. to
act as financial advisor and Torys LLP to act as legal advisor.
Joint Conference Call and Webcast:
AuRico and Northgate will hold a joint
conference call and webcast on Monday,
August 29, 2011 starting at 8:30 a.m.
Eastern Time.
Conference Call Access:
- Canada & US Toll Free:
(888) 231-8191
- International & Toronto:
(647) 427-7450
Conference Call Webcast:
The conference call event will be broadcast live
on the internet via webcast. To access the webcast please follow
the link provided below:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3637480
A live and archived webcast will be available at
www.auricogold.com and at www.northgateminerals.com.
About AuRico
Gold:
AuRico Gold is a
leading intermediate Canadian gold and silver producer with a
diversified portfolio of high quality mines and projects in
Mexico. The Company's three
wholly-owned operating properties include the Ocampo mine in Chihuahua State, the El Chanate
mine in Sonora State and the El
Cubo mine in Guanajuato State. A strong pipeline of
development and exploration stage projects include the Guadalupe y
Calvo advanced development property in Chihuahua State and the
Orion advanced development property in Nayarit State, along with six exploration
properties throughout Mexico.
AuRico's head office is located in Toronto, Ontario, Canada.
About Northgate Minerals:
Northgate Minerals Corporation is a gold and
copper producer with mining operations, development projects and
exploration properties in the Americas and Australia.
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 ounces of gold
commencing in 2012.
Cautionary Statement
Cautionary Note to US Investors - The United
States Securities and Exchange Commission permits US mining
companies, in their filings with the SEC, to disclose only those
mineral deposits that a company can economically and legally
extract or produce. This press release uses certain terms, such as
"measured", "indicated" and "inferred" "resources,‛ that the SEC
guidelines strictly prohibit US registered companies from including
in their filings with the SEC. US Investors are urged to consider
closely the disclosure in AuRico
Gold's Annual Report on Form 40-F, which may be secured from
AuRico Gold, or from the SEC's
website at http://www.sec.gov/edgar.shtml.
No stock exchange, securities commission or
other regulatory authority has approved or disapproved the
information contained herein.
Certain statements included herein, including
information as to the future financial or operating performance of
the Company, its subsidiaries and its projects, constitute
forward-looking statements. The words ''believe'', ''expect'',
''anticipate'', ''target'', ''continue'', ''estimate'', ''may'',
and similar expressions identify forward-looking statements.
Forward-looking statements include, among other things, statements
regarding the benefits of the acquisition of Northgate
including anticipated future production, cash flows, cash
costs and synergies, the future coverage of the combined
company by analysts, the likelihood of a revaluation of the
Company's securities, the ability to delineate additional measured
and indicated resources or reserves, anticipated future financial
and operational performance, the future price of gold and silver,
the de-risking of operations, the success of the Company's
exploration, the Company's ability to delineate additional
resources and reserves as a result of such programmes, statements
regarding its financial exposure to litigation, targets, estimates
and assumptions in respect of gold and silver production and
prices, operating costs, results and capital expenditures, mineral
reserves and mineral resources and anticipated grades, recovery
rates, future financial or operating performance, margins,
operating and exploration expenditures, costs and timing of
completion of the Ocampo expansion
program and improvements to the heap leach pad, costs and timing of
the development and commencement of production of new deposits,
costs and timing of construction, costs and timing of future
exploration and reclamation expenses including, anticipated 2011
results, operating performance projections for 2011, our ability to
fully fund our business model internally, 2011 gold and silver
production and the cash and operating costs associated therewith,
the ability to achieve productivity and operational efficiencies,
and the timing of each thereof. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable by the Company, are inherently subject
to significant business, economic, competitive, political and
social uncertainties and contingencies. Many factors could cause
the Company's actual results to differ materially from those
expressed or implied in any forward-looking statements made by, or
on behalf of, the Company. Such factors include, among others,
known and unknown uncertainties and risks relating to additional
funding requirements, reserve and resource estimates, commodity
prices, hedging activities, exploration, development and operating
risks, illegal miners, political and foreign risk, uninsurable
risks, competition, limited mining operations, production
risks, environmental regulation and liability, government
regulation, currency fluctuations, recent losses and write-downs,
restrictions in the Company's loan facility, dependence on key
employees, possible variations of ore grade or recovery rates,
failure of plant, equipment or process to operate as anticipated,
accidents and labour disputes. Investors are cautioned that
forward-looking statements are not guarantees of future performance
and, accordingly, investors are cautioned not to put undue reliance
on forward-looking statements due to the inherent uncertainty
therein.
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1 Adding together the midpoints of
AuRico's production guidance (265,000 - 295,000 gold equivalent
ounces) and Northgate's production guidance (190,000 - 200,000 gold
ounces)
2 Gold equivalent ounces include silver
ounces produced and sold converted to gold equivalent based on
AuRico's long-term gold equivalency ratio of 55:1
3 As per street consensus
4 Pro forma ownership indicated does not
include any equity interest that may arise out of Northgate's
outstanding convertible note
SOURCE AuRico Gold Inc.