everybody involved."
Gallagher confirmed the
intention of New Gold is to
continue with the gold mine
plans set forth by Rainy River
Resources.
"Once we get full ownership,
we can confirm it but
the timeline now is to have the
mine up and running in 2016,"
he noted.
"I think particularly because
of our company's our strong
balance sheet, our good financial
position, it eliminates that
risk of finance to get the project
constructed," he added.
New Gold is offering a 42
, percent premium over market
prices to acquire the junior
mining company, which has
an office located in Emo and is
in the advanced stages of the
Rainy River Gold Project north
of Barwick.
It's offer is $3.83 per sharepaying
up to $198 million in
cash, with the remainder in
stock on a prorated basis, to a
maximum of about 25 million
New Gold shares.
The offer values the share
capital of Rainy River, net of
its current cash balance, at
roughly $310 million.
The board of directors of
.Rainy River Resources, upon
the unanimous recommendation
of its special committee,
unanimously approved entering
into the acquisition agreement
and recommends that
Rainy River shareholders tender
their shares to the offer.
New Gold's takeover bid circular
and related documents,
which will include full details
of the offer, will be mailed out
to shareholders next week, as
well as Rainy River Resources'
recommendation to accept it.
Then there is a 35-day period
for shareholders to tender
their shares, so the companies
are looking to complete the
deal by mid-Iuly,
New Gold will receive a
$14-million termination fee
if Rainy River Resources gets
and accepts a superior offer.
"By doing this deal now, we
have provided greater certainty
to the development of the
Rainy River Gold Project while
providing our shareholders
exposure to the-upside in New
Gold shares," Threlkeld reiterated.
•
"We have a great project,
with pre-production capital
requirements of $700 million
over the next couple of years,"
he noted.
"While we have been dillgently
investigating various
types of financing, we recognize
that gold equity markets
are challenging right now and
we cannot predict the future.
"As a producer, New Gold
has greater access to different
financing options," Threlkeld
explained. "And, typically,
producers such as New Gold
benefit before developers from
gold price increases.
- "With this deal, Rainy River
stakeholders, including our
community and aboriginal·
partners, .benefit from the
increased certainty and New
Gold share participation
option," he added.' '
Threlkeld, meanwhile, indicated
business will _continue
as usual at its Emo office, as
well as the work that's ongoing
at the exploration site.
"The Rainy River employees
will get to stay on with New
Gold, if they wish, as they need
an operating team," he noted,