New Gold Agrees to Acquire Richfield
Ventures Corp. - Adds Gold Project in British Columbia
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
-------------------------------------------------------------------------
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)
-------------------------------------------------------------------------
Total
Blackwater 53,460 1.06 5.6 1.83 75,452 0.96 4.0 2.34
-------------------------------------------------------------------------
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
-------------------------------------------------------------------------
Total
Richfield 53,377 1.06 5.6 1.83 63,885 0.97 4.2 2.00
-------------------------------------------------------------------------
>>
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.