(All figures are in Canadian dollars unless otherwise
indicated)
VANCOUVER, April 4 /PRNewswire-FirstCall/ - New Gold Inc.
("New Gold") (TSX:NGD) (AMEX:NGD) and Richfield Ventures Corp.
("Richfield") (TSX.V:RVC) today jointly announce a definitive
agreement whereby New Gold will acquire, through a plan of
arrangement (the "Arrangement"), all of the outstanding common
shares of Richfield. Under the terms of the Arrangement, each
Richfield shareholder will receive 0.9217 of a New Gold share for
each Richfield share held. The offer values Richfield at
$10.38 per share or approximately
$550 million, representing a 31%
premium to Richfield's April 1, 2011
closing price and a 46% premium based on each company's 20-day
volume weighted average price. The transaction value, net of cash
and proceeds from all in-the-money dilutive instruments, is
approximately $513 million.
Richfield's flagship asset is the Blackwater Project, located in
central British Columbia,
approximately 160 kilometres southwest of Prince George, a city of approximately 80,000.
On March 2, 2011, Richfield announced
the initial mineral resource estimate for the Blackwater Project,
with its attributable share comprising 1.8 million ounces of
indicated gold resources plus 2.0 million ounces of inferred gold
resources. See Blackwater Project below for additional detail.
Transaction Highlights - New Gold
- Adds a large gold asset in British Columbia where New Gold is well
advanced in bringing its New Afton Project into production
- Adds an established attributable gold resource base of 1.8 million
ounces of indicated mineral resources and 2.0 million ounces of
inferred mineral resources with significant exploration potential
- Timeline for development that matches availability of New Gold's
proven mine building team
- Ability to fund development from internal cash flow
- Tax synergies with New Afton
- Minimal shareholder dilution of approximately 10%
"The acquisition of the Blackwater Project is an ideal fit with
our goal of continuing to enhance value in jurisdictions where we
already have a strong presence. This is an exciting gold project
that we anticipate could significantly increase our gold production
base at competitive cash costs in the years ahead," stated
Randall Oliphant, New Gold Executive
Chairman.
"The Richfield team have done a tremendous job in advancing the
project to this point and we are excited to now move forward with
it. With New Afton in British
Columbia on track to begin production in mid-2012, we will
be well positioned to deploy both the team and cash flow from New
Afton to move the Blackwater Project through continued exploration,
development and ultimately into production."
Transaction Highlights - Richfield
- Immediate and attractive premium recognizing both the current value
and potential of the Blackwater Project
- All-share deal - shareholders retain ongoing exposure to the
Blackwater Project and gain exposure to New Gold's diversified gold
production base and exciting growth projects
- New Gold provides technical expertise and financial capability to
move the Blackwater Project through development and into production
- Significantly enhanced trading liquidity upon receiving New Gold
shares
"I am thrilled by this win-win transaction for both Richfield's
shareholders and those of New Gold. The Blackwater Project will be
in excellent hands with New Gold, a proven mine builder and
operator, that has the financial capacity and the exploration and
development expertise to continue to expand and ultimately develop
the gold resources at Blackwater," said Peter Bernier, Richfield
President and Chief Executive Officer. "I am proud of the
Richfield team's hard work in making this project into the success
that it is today, and very excited going forward for our
shareholders to own a meaningful portion of New Gold. This will
allow us not only to participate in the continued advancement of
Blackwater, but also to be part of New Gold's exciting growth
portfolio."
Blackwater Project
The Blackwater Project is a bulk-tonnage gold project located in
central British Columbia and is
approximately 450 kilometres north of New Gold's New Afton Project.
The project area covers 23,670 hectares, with Richfield owning 100%
of the southern claims and 75% of the adjacent northern claims.
Silver Quest Resources Ltd. owns the remaining 25% of the northern
Davidson claims. The project is
attractively located and is near infrastructure, the terrain is
characterized by rolling hills, the project is accessible by road
and four alternatives to tie in to a 230kV powerline have been
discussed with BC Hydro. On March 2,
2011, Richfield announced the initial mineral resource
estimate for the Blackwater Project with the majority of the
drilling supporting the estimate having been done on the 100%-owned
southern portion of the project.
Blackwater Deposit - Resource Estimates by Property at 0.4 g/t
Au Cut-off grade(1)
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Indicated Inferred
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Grade Grade
----------- Contained ----------- Contained
Tonnes Gold Silver Gold Tonnes Gold Silver Gold
Property (000's) (g/t) (g/t) (Moz) (000's) (g/t) (g/t) (Moz)
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Total
Blackwater 53,460 1.06 5.6 1.83 75,452 0.96 4.0 2.34
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Dave and
Jarrit
claims
(100%
Richfield) 53,128 1.07 5.6 1.82 29,183 1.04 5.5 0.98
-------------------------------------------------------------------------
Davidson
claims (75%
Richfield,
25% Silver
Quest
Resources
Ltd.) 331 0.92 5.0 0.01 46,269 0.92 3.1 1.36
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Total
Richfield 53,377 1.06 5.6 1.83 63,885 0.97 4.2 2.00
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Terms of Offer
- For each common share of Richfield, New Gold will offer 0.9217 of a
New Gold common share, plus nominal cash consideration
- Values Richfield at $10.38 per share or approximately $550 million
based on Richfield's fully diluted in-the-money common shares
outstanding and New Gold's April 1, 2011 closing price
- Transaction value, net of cash and proceeds from all in-the-money
dilutive instruments, is approximately $513 million
- Represents a 31% premium to Richfield's April 1, 2011 closing price
and a 46% premium based on the 20-day volume weighted average prices
of each company
- Transaction unanimously approved by the Boards of New Gold and
Richfield
- Directors and Officers of Richfield, representing approximately 15.8%
of the common shares and options outstanding have entered into voting
agreements in support of the Arrangement
- $18 million break fee
- New Gold retains a right to match any superior proposal
The acquisition of Richfield by New Gold is expected to be
completed by way of a court approved plan of arrangement. The
number of New Gold shares to be issued will be approximately 49
million based on Richfield's fully diluted in-the-money common
shares outstanding. Richfield's stock options outstanding on the
effective date of the Arrangement will be exchanged for New Gold
shares on a cashless exercise basis in accordance with the terms of
the plan of arrangement. Richfield's warrants outstanding on the
effective date will become exercisable into the Arrangement
consideration following the completion of the Arrangement. Prior to
the effective date, Richfield will accelerate the expiry of those
outstanding warrants subject to an expiry abridgement clause. The
transaction is expected to close in June
2011 and upon closing Richfield shareholders will own
approximately 10.4% of New Gold on a fully diluted in-the-money
basis.
The Arrangement has been approved unanimously by the Boards of
Directors of New Gold and Richfield and will be subject to, among
other things, the favourable vote of 66 2/3% of the votes cast by
holders of the Richfield common shares and options voting as a
single class at a special meeting of Richfield securityholders
called to approve the transaction which is expected to take place
in late May or early June 2011. New
Gold's and Richfield's respective financial advisors have each
provided verbal opinions as to the fairness of the transaction,
from a financial point of view, and the Richfield Board unanimously
recommends that its shareholders vote in favour of the Arrangement.
Directors and Officers of Richfield have entered into voting
agreements with New Gold under which they have agreed to vote in
favour of the Arrangement, their Richfield shares and options,
which represent approximately 15.8% of Richfield's outstanding
common shares and options as of April 1,
2011.
In the event that the Arrangement is not completed, Richfield
has agreed, under certain circumstances, to pay New Gold a
termination fee equal to $18 million.
Richfield has also provided New Gold with certain other customary
rights, including a right to match competing offers. In addition,
if Richfield securityholders do not approve the transaction,
Richfield has agreed to pay an expense fee of $1 million to New Gold.
Richfield securityholders and other interested parties are
advised to read the materials relating to the proposed Arrangement
that will be filed by Richfield with securities regulatory
authorities in Canada when they
become available. Anyone may obtain copies of these documents when
available free of charge at the Canadian Securities Administrators'
website at www.sedar.com.
This announcement is for informational purposes only and does
not constitute an offer to purchase, a solicitation of an offer to
sell the shares or a solicitation of a proxy.
New Gold's financial advisor is Canaccord Genuity Corp. and its
legal advisors are Cassels Brock
& Blackwell LLP in Canada and
Shearman & Sterling LLP in the United
States. Richfield's financial advisor is National Bank
Financial Inc. and its legal advisor is McMillan LLP in
Canada.
Joint Conference Call and Webcast
New Gold and Richfield will hold a joint conference call and
webcast on Monday, April 4th, 2011 at
9:00 am Eastern Time to discuss the
proposed acquisition. Participants may join the conference by
calling 1-416-340-2217 or toll-free 1-866-696-5910 in North America, and 800-8989-6336 toll-free
outside of North America. The
Passcode is 6711188. To listen to a recorded playback of the call
after the event, please call 1-905-694-9451 or toll-free
1-800-408-3053 in North America -
Passcode 7044424.
A live and archived webcast will be available at
www.newgold.com
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About New Gold Inc.
New Gold is an intermediate gold mining company. The Mesquite Mine in the
United States, the Cerro San Pedro Mine in Mexico and Peak Gold Mines in
Australia are expected to produce between 380,000 and 400,000 ounces of
gold in 2011. The fully-funded New Afton project in Canada is scheduled
to add further growth in 2012. In addition, New Gold owns 30% of the
world-class El Morro project located in Chile. For further information on
the company, please visit www.newgold.com.
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About Richfield Ventures Corp.
Richfield Ventures Corp. is a public mineral exploration company trading
on the TSX Venture Exchange under the symbol RVC. Richfield has been
actively acquiring and exploring mineral tenures in the Quesnel Trough
and Nechako Plateau regions of British Columbia. For further information
on the company, please visit www.richfieldventures.ca.
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(1) See Richfield March 2, 2011 NI 43-101 Technical Report available on
SEDAR at www.sedar.com for detailed information regarding the
Blackwater Project resource estimate. The Blackwater resource
estimate contained in this news release is effective as of March 2,
2011 and was derived from information prepared by or under the
supervision of Mr. Ronald Simpson, P. Geo, President of Geosim
Services Inc., an independent "qualified person" under National
Instrument 43-101 Standards of Disclosure for Mineral Projects
NI 43-101.
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this news release, including
any information relating to New Gold's and/or Richfield's future
financial or operating performance may be deemed "forward looking".
All statements in this news release, other than statements of
historical fact, that address events or developments that New
Gold/Richfield 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 based on the opinions and estimates of the relevant
management as of the date such statements are made and are subject
to important risk factors and uncertainties, many of which are
beyond New Gold/Richfield's ability to control or predict.
Forward-looking statements are necessarily based on estimates and
assumptions (including that the Arrangement will be completed
successfully on the terms agreed upon by the parties and that the
business of Richfield will be integrated successfully in the New
Gold organization) that are inherently subject to known and unknown
risks, uncertainties and other factors that may cause actual
results, level of activity, performance or achievements to be
materially different from those expressed or implied by such
forward-looking statements. In the case of New Gold, such factors
include, without limitation: significant capital requirements;
fluctuations in the international currency markets and in the rates
of exchange of the currencies of Canada, the United
States, Australia,
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, Mexico and Chile or any other country in which New Gold
currently or may in the future carry on business; taxation;
controls, regulations and political or economic developments in the
countries in which New Gold does or may carry on business; the
speculative nature of mineral exploration and development,
including the risks of obtaining and maintaining the validity and
enforceability of the necessary licenses and permits and complying
with the permitting requirements of each jurisdiction that New Gold
operates, including, but not limited to, Mexico, where New Gold is involved with
ongoing challenges relating to its environmental impact statement
for the Cerro San Pedro Mine; the lack of certainty with respect to
the Mexican and other foreign legal systems, which may not be
immune from the influence of political pressure, corruption or
other factors that are inconsistent with the rule of law; the
uncertainties inherent to current and future legal challenges the
company is or may become a party to, including the third party
claim related to the El Morro transaction with respect to New
Gold's exercise of its right of first refusal on the El Morro
copper-gold project in Chile and
its partnership with Goldcorp Inc., which transaction and third
party claim were announced by New Gold in January 2010; 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 the case of Richfield, such risks include, among other risks,
the approvals of regulators, availability of funds, the results of
financing and exploration activities, the interpretation of
drilling results and geological data, project cost overruns or
unanticipated costs and expenses. 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" included in New Gold's and Richfield's
continuous disclosure documents filed on and available at
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 news release are
qualified by these cautionary statements. New Gold/Richfield
expressly disclaims 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.
Cautionary Note to U.S. Readers Concerning Estimates of
Measured, Indicated and Inferred Mineral Resources
Information concerning the properties and operations discussed
herein has been prepared in accordance with Canadian standards
under applicable Canadian securities laws, and may not be
comparable to similar information for United States companies. The terms "Mineral
Resource", "Measured Mineral Resource", "Indicated Mineral
Resource" and "Inferred Mineral Resource" used in this news release
are Canadian mining terms as defined in accordance with NI 43-101
under guidelines set out in the Canadian Institute of Mining,
Metallurgy and Petroleum ("CIM") Standards on Mineral Resources and
Mineral Reserves adopted by the CIM Council on December 11, 2005. While the terms "Mineral
Resource", "Measured Mineral Resource", "Indicated Mineral
Resource" and "Inferred Mineral Resource" are recognized and
required by Canadian regulations, they are not defined terms under
standards of the United States Securities and Exchange Commission.
Under United States standards,
mineralization may not be classified as a "reserve" unless the
determination has been made that the mineralization could be
economically and legally produced or extracted at the time the
reserve calculation is made. As such, certain information contained
in this news release concerning descriptions of mineralization and
resources under Canadian standards is not comparable to similar
information made public by United
States companies subject to the reporting and disclosure
requirements of the United States Securities and Exchange
Commission. An "Inferred Mineral Resource" has a great amount of
uncertainty as to its existence and as to its economic and legal
feasibility. It cannot be assumed that all or any part of an
"Inferred Mineral Resource" will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or other economic
studies. Readers are cautioned not to assume that all or any part
of Measured or Indicated Resources will ever be converted into
Mineral Reserves. Readers are also cautioned not to assume that all
or any part of an "Inferred Mineral Resource" exists, or is
economically or legally mineable. In addition, the definitions of
"Proven Mineral Reserves" and "Probable Mineral Reserves" under CIM
standards differ in certain respects from the standards of the
United States Securities and Exchange Commission.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE New Gold Inc.