New Gold Inc. is buying Richfield Ventures Corp. in a friendly all-stock deal valued at $550 million, the companies announced today.
Under the arrangement, Richfield shareholders will receive 0.9217 of a New Gold share for each Richfield share, valued at $10.38. The offer represents a 31% premium to Richfield's share price as of Friday's market close. The deal has been approved by both company's boards.
Richfield’s flagship asset is the Blackwater Project, located in central British Columbia about 160 kilometres southwest of Prince George. The deposit is estimated to contain 1.8 million ounces of indicated gold resources and 2 million ounces inferred.
New Gold chair Randall Oliphant said the acquisition is a good fit with its current pipeline of projects, including New Afton in B.C., which is expected to begin production in mid-2012.
"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.”