Canadian gold rush continues as AuRico buys Northgate Minerals

AURICO Gold, a Mexico-focused gold miner in a drive to reposition itself, said yesterday it would buy Northgate Minerals in an all-stock deal worth C$1.46bn (£909m).

The acquisition is the latest in a string of deals involving Canadian gold miners as prices for the metal climb faster than even many of the most bullish forecasts.

If approved, the deal would see AuRico’s gold resource rise from 10.3m gold equivalent ounces to almost 19m. Annual production would increase to 470,000 ounces in 2011 from 280,000, and the combined output would be more than 730,000 ounces by 2013.

AuRico changed its name from Gammon Gold in May, a month after buying Capital Gold for C$420m. That followed a drawn out battle for the company with smaller rival Timmins Gold.

Under the terms of the agreement, Toronto-based AuRico will pay 0.365 of a common share for each Northgate common share. When the deal was announced, prior to the market open, the offer was worth about C$5.01 a share, or C$1.46bn in total. That fell to C$4.37 a share, or C$1.26 billion, after the open.