AuRico (AUQ) (ex-Gammon Gold) is down oodles this morning because it will basically pay anything to get its production profile up and away from the underperforming assets it has in Mexico. Here's the NR:
TORONTO, Aug. 29, 2011 /PRNewswire/ - AuRico Gold Inc. ("AuRico") (TSX:AUQ.to - News) (NYSE:AUQ - News) and Northgate Minerals Corporation ("Northgate") (TSX:NGX.to - News) (NYSE-Amex:NXG) are pleased to announce that they have entered into a definitive acquisition agreement (the "Agreement") to create a new leading intermediate gold producer. The new company will have 5 operating gold mines, a sixth mine targeting production in 2012 and 3 gold development projects in Mexico, Canada, and Australia, three of the top global mining jurisdictions. The combined company is completely unhedged and offers full exposure to record gold and silver prices and an exceptional growth profile from approximately 475,0001 gold equivalent ("Aue") ounces2 this year to 730,000+3 Aue ounces in 2013 (growth of approximately 54%). All figures in Canadian dollars, unless otherwise indicated.
Under the terms of the Agreement, AuRico will acquire all of the issued and outstanding common shares of Northgate on the basis of 0.365 AuRico common shares per Northgate common share. Based on both companies' 20-day volume weighted average prices on the Toronto Stock Exchange (TSX) ending on August 26, 2011, the exchange ratio under the offer represents a 45% premium to Northgate's shareholders.
"The combination of AuRico and Northgate will immediately position the combined company as a pre-eminent intermediate gold producer with peer leading growth", said Rene Marion, President and CEO of AuRico. "The assets, projects and people in our two companies are highly yada yada continues here
Right now AUQ is off 12% on this news, but hardly surprising for those who watch this dog from the sidelines, as AuRico, ex-Gammon, has a long history of more-talk-than-walk and snatching defeat from the jaws of victory at any given moment. And by the way Rene, AuRico is a really stupid corporate name.
UPDATE: Apparently technicals are the "first things" you need to know about a gold stock. Ahhh, silly old me for actually following a company and knowing its track record, eh....
UPDATE 2: What Brian Christie of Desjardin's thinks (extract):
Le market c'est moi? Nope, just happened to state the obvious earlier, that's all.
UPDATE: Apparently technicals are the "first things" you need to know about a gold stock. Ahhh, silly old me for actually following a company and knowing its track record, eh....
UPDATE 2: What Brian Christie of Desjardin's thinks (extract):
We expect the market will view this transaction negatively. It is likely that the market believes that AuRico is overpaying for the Young-Davidson asset, given that based on our experience, we believe it will ascribe little value to Northgate’s Australian mines and Kemess project. However, we note that AuRico has a strong track record of turning around and/or optimizing various mining assets, as it has done with Ocampo and is currently doing with El Chanate.We will be reviewing our model for AuRico to reflect the proposed transaction.
Le market c'est moi? Nope, just happened to state the obvious earlier, that's all.