(All figures are in Canadian dollars unless otherwise indicated)
, /CNW/ - ("New Gold") (TSX and MKT:NGD) and ( (TSX: RR) today jointly announce that they have entered into a definitive acquisition agreement (the "Agreement"), whereby will offer to acquire all of the outstanding common shares of Rainy River through a friendly take-over bid. Under the terms of the Agreement, will offer, at the election of each holder of Rainy River common shares, 0.5 of a common share of or in cash, in each case subject to pro ration (the "Offer"). The Offer represents a premium of 42% over the closing price of the Rainy River shares on the on , the last day of trading prior to announcement of the Offer, and a 67% premium to Rainy River's 20-day volume weighted average trading price. The maximum number of shares to be issued will be approximately 25.8 million and the maximum cash consideration will be approximately . The Offer values the fully-diluted in-the-money share capital of Rainy River, net of Rainy River's current cash balance, at approximately .
Transaction Highlights -
- Accretive on all key per share metrics - gold reserves, net asset value, future production and cash flow
- Adds 4.0 million ounce gold reserve in , further growing Canadian presence
- Asset located in great mining jurisdiction, near infrastructure
- Enhances pipeline by adding asset with annual average production potential of over 225,000 ounces over the life of the mine, at below industry average total cash costs(1)
- Modest transaction size with minimal equity dilution to shareholders
- Further strengthens technical development team, who have a track record of delivering on projects
"The acquisition of Rainy River is consistent with our strategy of identifying opportunities to create shareholder value," stated , Executive Chairman. "We have followed Rainy River for some time and see this as an opportune time to add this great asset to our portfolio. We view the combination of Rainy River's ideal location, sizeable reserve, robust production potential and experienced team as presenting a truly compelling opportunity."
Transaction Highlights - Rainy River
- Significant and immediate premium of 42% to current share price and 67% to 20-day volume weighted average share price
- Flexibility to elect form of consideration in either cash or highly liquid shares
- Opportunity to gain exposure to current operating cash flow and attractive growth portfolio
- Access to strong balance sheet and current and future operating cash flow to develop the Rainy River project
- Ability to partner with experienced management and operating teams
"This is a great outcome for Rainy River shareholders," stated , Chair of the Special Committee of the Board of Directors of Rainy River. "To be able to realize a meaningful premium, while gaining the ability to combine with a well-established mine builder in , is a win-win scenario for our shareholders. offer is a testament to both the quality of the Rainy River management team and their efforts to advance the Rainy River project to this point."
Rainy River Gold Project
The Rainy River Gold project is an advanced-stage gold project situated in the , approximately sixty-five kilometres northwest of in . The property has excellent infrastructure, with year-round road access and powerlines in close proximity, as well as a railway located 21 kilometres to the south of the property. The area has a population of approximately 10,000 people from which a workforce could be sourced for future development.
On , Rainy River announced the results of a Feasibility Study for the project, with 4.0 million ounces in Proven and Probable gold reserves and 6.2 million ounces in Measured and Indicated gold resources, inclusive of reserves. The Feasibility Study contemplates a 21,000 tonne per day processing rate from a combination of open pit, underground and stockpiled ore. The project has the potential to produce over 225,000 ounces of gold annually, at below industry average cash costs(1), for an initial mine life of 16 years. The Feasibility Study also highlights the potential to process higher grade ounces in the project's early years, while stockpiling lower grades for processing towards the end of the mine life. This should help drive higher production and lower costs at the beginning of the mine life, enhancing both cash flow and the overall economics of the project.
|
| Rainy River Mineral Resource Estimate |
|
|
Metal grade |
Contained metal |
|
Tonnes
(Mt) |
Au
(grams per tonne) |
Ag
(grams per tonne) |
Au
(koz) |
Ag
(koz) |
| Proven |
27.7 |
1.14 |
1.94 |
1,015 |
1,728 |
| Probable |
88.6 |
1.06 |
3.01 |
3,017 |
8,587 |
| Total Reserves |
116.3 |
1.08 |
2.76 |
4,032 |
10,315 |
| Measured |
27.6 |
1.33 |
1.90 |
1,182 |
1,689 |
| Indicated |
130.9 |
1.18 |
2.77 |
4,985 |
11,649 |
| Total Measured & Indicated |
158.5 |
1.21 |
2.62 |
6,167 |
13,338 |
| Inferred |
93.8 |
0.76 |
2.32 |
2,280 |
6,983 |
Additional Details of Offer
The Board of Directors of Rainy River, upon the unanimous recommendation of its Special Committee, after consultation with its financial and legal advisors, has unanimously approved entering into the Agreement and recommends that Rainy River shareholders tender their shares to the Offer. , the financial advisor to Rainy River, has provided a verbal opinion to the effect that, as of the date of such opinion and subject to the assumptions, limitations, and qualifications stated in such opinion, the consideration proposed to be paid to the holders of Rainy River common shares pursuant to the Offer is fair from a financial point of view to such holders. CIBC World Markets has provided a separate verbal opinion solely to Rainy River's Special Committee to the effect that, as of the date of such opinion and subject to the assumptions, limitations, and qualifications stated in such opinion, the consideration proposed to be paid to the holders of Rainy River common shares pursuant to the Offer is fair from a financial point of view to such holders.
Rainy River's Board of Directors and management team have entered into lock-up agreements with agreeing to tender their shares, including shares issuable on the exercise of stock options, and support the transaction.
The Agreement between and Rainy River provides for, among other things, a non-solicitation covenant on the part of Rainy River subject to customary "fiduciary out" provisions, a right in favour of to match any superior proposal and a payment to of a termination fee of approximately in certain circumstances, including if Rainy River accepts a superior proposal.
The Offer is expected to commence during the week of upon the mailing of takeover bid circular and related documents, which will include full details of the Offer. Rainy River's directors' circular, which will set out the unanimous recommendation of the board of Rainy River that shareholders accept the Offer, will also be mailed. The Offer will be open for acceptance for a period of not less than 35 days from the date of mailing of the takeover bid circular and will be conditional upon, among other things, there being deposited under the Offer, and not withdrawn at the expiry time, shares representing not less than 66 2/3% of the Rainy River shares on a fully diluted basis. In addition, the Offer will be subject to certain customary conditions, including receipt of relevant regulatory approvals and the absence of a material adverse change with respect to Rainy River.
financial advisor is and its legal advisors are in and in . Rainy River's financial advisor is and its legal advisors are and . CIBC World Markets provided a fairness opinion to Rainy River's Special Committee.
Webcast and Conference Call
will hold a conference call and webcast on at to discuss the proposed acquisition. A live audio webcast will be available on homepage at www.newgold.com. Participants may also join the conference by calling 1-647-427-7450 or toll-free 1-888-231-8191 in . To listen to a recorded playback of the call after the event, please call 1-416-849-0833 or toll-free 1-855-859-2056 in - Passcode 88929900. The archived webcast will also be available after the call at www.newgold.com.