New Gold Completes Cdn$1.2 Billion Business Combination with Western Goldfields
01 June 2009 - 11:19PM
PR Newswire (US)
VANCOUVER and TORONTO, June 1 /PRNewswire-FirstCall/ -- New Gold
Inc. (TSX and NYSE Amex: NGD) ("New Gold") and Western Goldfields
Inc. (TSX: WGI and NYSE Amex: WGW) ("Western Goldfields") are
pleased to announce that they have completed their previously
announced business combination (the "Transaction"). The Transaction
was completed by way of a plan of arrangement (the "Plan of
Arrangement") that was approved by the New Gold and Western
Goldfields shareholders on May 13 and 14, 2009, respectively and
which received final court approval on May 27, 2009. "The closing
of this transaction represents another significant step for New
Gold as we continue to deliver on our growth strategy which we had
promised our shareholders approximately one year ago," said Robert
Gallagher, President and Chief Executive Officer of New Gold. "We
are excited to bring the Mesquite Mine into our portfolio of assets
as we continue to focus on growth by enhancing our operations,
continuing the development of New Afton and pursuing strategic
acquisition opportunities." Randall Oliphant, Executive Chairman
added, "As we now have the company fully funded, New Gold finds
itself in a strong position, with growing production and cash flow
enabling it to become the leading intermediate gold producer".
Pursuant to the Plan of Arrangement, New Gold acquired all of the
issued and outstanding common shares of Western Goldfields in
consideration for the issuance by New Gold of one common share of
New Gold and Cdn$0.0001 for each Western Goldfields common share
outstanding. All of the stock options of Western Goldfields
outstanding at the effective time of the arrangement were replaced
by options to purchase common shares of New Gold. All outstanding
warrants to acquire common shares of Western Goldfields will,
pursuant to their terms, be exercisable for common shares of New
Gold and the nominal cash consideration. Pursuant to the plan of
arrangement, New Gold has issued an aggregate of approximately 143
million common shares of New Gold to the former shareholders of
Western Goldfields and authorized the issuance of an additional 12
million common shares upon the exercise of the stock options and
warrants held by the former security holders of Western Goldfields.
As at June 1, 2009, following completion of the Transaction, there
are approximately 356 million issued and outstanding common shares
of New Gold. The TSX will disseminate a notice announcing the
delisting of the Western Goldfields shares. Upon notification of
the closing of the Transaction, the NYSE Amex will suspend trading
of the Western Goldfields shares and the NYSE Amex will file a Form
25. Western Goldfields shareholders should send in their completed
and executed letters of transmittal and Western Goldfields share
certificates to New Gold's transfer agent, Computershare Trust
Company of Canada as soon as possible in order to receive the
consideration to which they are entitled pursuant to the
arrangement. A copy of the letter of transmittal is available on
SEDAR at http://www.sedar.com/ under the Western Goldfields
profile. The Plan of Arrangement contemplated certain steps,
including a merger of Western Goldfields with a wholly-owned
subsidiary of New Gold, so as to permit the Transaction to qualify
as a tax-deferred reorganization for U.S. federal income tax
purposes if certain technical requirements under the U.S. Internal
Revenue Code were met. Western Goldfields and New Gold have
determined that it is unlikely that these requirements were met,
and accordingly, as contemplated under the terms of the Business
Combination Agreement, have amended the Plan of Arrangement so that
the merger of Western Goldfields with a wholly-owned subsidiary of
New Gold and certain other steps will not occur. As a result, the
Transaction will not qualify as a tax-deferred reorganization for
U.S. federal income tax purposes, and U.S. shareholders of Western
Goldfields generally should fully recognize a gain or loss upon
exchanging their Western Goldfields common shares for New Gold
common shares, as described in detail under the heading "Certain
United States Federal Income Tax Considerations" in the Joint
Management Information Circular Supplement dated April 8, 2009
which is available on SEDAR. Randall Oliphant, Ray Threlkeld, Vahan
Kololian and Martyn Konig, Western Goldfields directors have been
appointed to the New Gold board of directors and Brian Penny and
Wes Hanson of Western Goldfields will join the New Gold Management
as Executive Vice President and Chief Financial Officer, and Vice
President Technical Services respectively, effective at the closing
of the Transaction. New Gold would like to take this opportunity to
thank Clifford Davis, the departing New Gold Director, for his
invaluable contributions to the board of New Gold, and especially
for his dedication to the development of the New Afton project
prior to the three-way transaction last year. New Gold would also
like to recognize and thank Gerald Ruth, outgoing Western
Goldfields director for his commitment and contributions to Western
Goldfields over the years. In addition, we would also like to
extend our gratitude and best wishes to Basil Huxham, former
Executive Vice President and Chief Financial Officer of New Gold,
who has retired. His dedication to New Gold and previously Peak
Gold Ltd., has been instrumental in building a strong intermediate
gold mining company. About New Gold New Gold is an intermediate
gold mining company, headquartered in Vancouver, British Columbia,
Canada with three operating assets; the Mesquite Mine in the United
States, Cerro San Pedro Mine in Mexico and the Peak Mines in
Australia. The newly combined company is expected to produce
between 330,000 and 360,000 ounces of gold in 2009, growing to over
400,000 ounces in 2012 and have significant reserves and resources
with a strong portfolio of mining, development and exploration
assets in mining friendly jurisdictions. For further information on
New Gold, please visit http://www.newgold.com/. CAUTIONARY NOTE
REGARDING FORWARD-LOOKING STATEMENTS Certain information contained
in this press release, including any information relating to the
transaction and New Gold or Western Goldfields future financial or
operating performance may be deemed "forward looking". All
statements in this press release, other than statements of
historical fact, that address events or developments that New Gold
or Western Goldfields expects to occur, are "forward-looking
statements". Forward-looking statements are statements that are not
historical facts and are generally, but not always, identified by
the words "expects", "does not expect", "plans", "anticipates",
"does not anticipate", "believes", "intends", "estimates",
"projects", "potential", "scheduled", "forecast", "budget" and
similar expressions, or that events or conditions "will", "would",
"may", "could", "should" or "might" occur. All such forward-looking
statements are subject to important risk factors and uncertainties,
many of which are beyond New Gold or Western Goldfields' ability to
control or predict. Forward-looking statements are necessarily
based on estimates and assumptions that are inherently subject to
known and unknown risks, uncertainties and other factors that may
cause New Gold or Western Goldfields' actual results, level of
activity, performance or achievements to be materially different
from those expressed or implied by such forward-looking statements.
Many of these assumptions are based on factors and events that are
not within the control of New Gold and Western Goldfields and there
is no assurance they will prove to be correct. Such factors
include, without limitation: capital requirements; fluctuations in
the international currency markets and in the rates of exchange of
the currencies of Canada, the United States, Australia, Brazil,
Mexico and Chile; price volatility in the spot and forward markets
for commodities; impact of any hedging activities, including margin
limits and margin calls; discrepancies between actual and estimated
production, between actual and estimated reserves and resources and
between actual and estimated metallurgical recoveries; changes in
national and local government legislation in Canada, the United
States, Australia, Brazil, Mexico and Chile or any other country in
which New Gold and Western Goldfields currently or may in the
future carry on business; taxation; controls, regulations and
political or economic developments in the countries in which New
Gold and Western Goldfields does or may carry on business; the
speculative nature of mineral exploration and development,
including the risks of obtaining necessary licenses and permits;
diminishing quantities or grades of reserves; competition; loss of
key employees; additional funding requirements; actual results of
current exploration or reclamation activities; changes in project
parameters as plans continue to be refined; accidents; labour
disputes; defective title to mineral claims or property or contests
over claims to mineral properties. In addition, there are risks and
hazards associated with the business of mineral exploration,
development and mining, including environmental hazards, industrial
accidents, unusual or unexpected formations, pressures, cave-ins,
flooding and gold bullion losses (and the risk of inadequate
insurance or inability to obtain insurance, to cover these risks)
as well as "Risk Factors" and "Risks and Uncertainties" included in
the Annual Information Form/10-K and MD&A and other filings for
each of New Gold and Western Goldfields available at
http://www.sedar.com/. Forward-looking statements are not
guarantees of future performance, and actual results and future
events could materially differ from those anticipated in such
statements. All of the forward-looking statements contained in this
press release are qualified by these cautionary statements. New
Gold and Western Goldfields expressly disclaim any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, events or otherwise, except
in accordance with applicable securities laws. DATASOURCE: New Gold
Inc. CONTACT: Melanie Hennessey, Vice President Investor Relations,
Direct: (604) 639-0022, Toll-free: 1-888-315-9715, Email:
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