New Gold (TSX:NGD) has made another multimillion-dollar investment in B.C.’s rocks.
The Vancouver-based precious metals producer announced a $513 million deal Monday to buy Richfield Ventures (TSX-V:RVC).
The takeover, which values Richfield at $10.38 per share, would see New Gold take control of the Blackwater gold project.
Blackwater is located 160 kilometres southwest of Prince George and contains some 1.8 million ounces of gold in an indicated category and two million ounces in an inferred category, which are the metrics Canadian mining companies use to determine deposit sizes.
The deal represents a 31% premium to Richfield’s April 1 closing price. The company’s stock was up 24.7% to $9.89 at midday trades Monday.
“I am thrilled by this win-win transaction for both Richfield’s shareholders and those of New Gold,” commented Peter Bernier, president and CEO of Richfield, which is headquartered in Quesnel.
Bernier said the company was “quite willing” to advance the project toward production on its own, a rarity among junior companies, but New Gold’s offer was too good to pass up.
“It was a good fit for us. With the deal we got, our shareholders aren’t going to say no,” Bernier said.
The deal marks New Gold’s second foray into B.C., where it’s in the midst of building its New Afton gold project near Kamloops.
New Afton is expected to come online in 2012. In the meantime, the company is generating revenue from gold mines in the U.S., Mexico and Australia.
“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,” said Randall Oliphant, New Gold’s executive chairman.
“This is an exciting gold project that we anticipate could significantly increase our gold production base at competitive cash costs in the years ahead.”
At press time, New Gold’s shares were down 4% to $10.81.
For more about B.C.’s flourishing mining sector, check out Business in Vancouver’s quarterly mining report published last month (see “Rock revival” – issue 1116; March 15-21).