Northgate Minerals’ (TSX:NGX) stock swelled 37% to $4.24 Monday after it was revealed the company had agreed to a $1.46 billion takeover.
The deal would see Toronto-based AuRico Gold (TSX:AUQ), formerly Gammon Gold, snap up the Vancouver-based gold company in an all-share transaction to create a new intermediate gold producer in Canada.
The acquisition comes as investors turn toward hard assets amid ongoing market turmoil, pushing gold prices to record highs in recent days.
Gold’s price per ounce was up US$8.50 to US$1,805 at midday trades Monday.
The deal represents an about-face for Northgate, which six weeks ago unveiled a US$409 million plan to buy Toronto’s Primero Mining (TSX:P). (See “Northgate Minerals to buy Primero mining” – BIV Business Today, July 14.)
Northgate and Primero said Monday that deal has gone by the wayside, with Northgate agreeing to pay a $25 million break fee.
The Northgate-AuRico deal would create a new company with five operating gold mines that would produce some 475,000 ounces this year.
“This transaction gives Northgate shareholders a significant premium to market and an exciting opportunity to participate in a leading intermediate gold company,” said Richard Hall, who was named Northgate’s president and CEO in July.
Northgate shareholders are expected to vote on the deal in October.
Joel McKay
Twitter:jmckaybiv