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New Gold Completes Cdn$1.2 Billion Business Combination with Western
Goldfields
Vancouver and Toronto, June 1, 2009 - New Gold Inc. (TSX and NYSE Amex:
NGD) ("New Gold") and Western Goldfields Inc. (TSX: WGI and
NYSE Amex: WGW) ("Western Goldfields") are pleased to announce
that they have completed their previously announced business combination
(the "Transaction"). The Transaction was completed by way of a
plan of arrangement (the "Plan of Arrangement") that was
approved by the New Gold and Western Goldfields shareholders on May 13
and 14, 2009, respectively and which received final court approval on May
27, 2009.
"The closing of this transaction represents another significant step
for New Gold as we continue to deliver on our growth strategy which we
had promised our shareholders approximately one year ago," said
Robert Gallagher, President and Chief Executive Officer of New Gold. "We
are excited to bring the Mesquite Mine into our portfolio of assets as we
continue to focus on growth by enhancing our operations, continuing the
development of New Afton and pursuing strategic acquisition
opportunities."
Randall Oliphant, Executive Chairman added, "As we now have the
company fully funded, New Gold finds itself in a strong position, with
growing production and cash flow enabling it to become the leading
intermediate gold producer".
Pursuant to the Plan of Arrangement, New Gold acquired all of the issued
and outstanding common shares of Western Goldfields in consideration for
the issuance by New Gold of one common share of New Gold and Cdn$0.0001
for each Western Goldfields common share outstanding. All of the
stock options of Western Goldfields outstanding at the effective time of
the arrangement were replaced by options to purchase common shares of New
Gold. All outstanding warrants to acquire common shares of Western
Goldfields will, pursuant to their terms, be exercisable for common
shares of New Gold and the nominal cash consideration.
Pursuant to the plan of arrangement, New Gold has issued an aggregate of
approximately 143 million common shares of New Gold to the former
shareholders of Western Goldfields and authorized the issuance of an
additional 12 million common shares upon the exercise of the stock
options and warrants held by the former security holders of Western
Goldfields. As at June 1, 2009, following completion of the
Transaction, there are approximately 356 million issued and outstanding
common shares of New Gold.
The TSX will disseminate a notice announcing the delisting of the Western
Goldfields shares. Upon notification of the closing of the
Transaction, the NYSE Amex will suspend trading of the Western Goldfields
shares and the NYSE Amex will file a Form 25. Western Goldfields
shareholders should send in their completed and executed letters of
transmittal and Western Goldfields share certificates to New Gold's
transfer agent, Computershare Trust Company of Canada as soon as possible
in order to receive the consideration to which they are entitled pursuant
to the arrangement. A copy of the letter of transmittal is available on
SEDAR at www.sedar.com under the Western Goldfields profile.
The Plan of Arrangement contemplated certain steps, including a merger of
Western Goldfields with a wholly-owned subsidiary of New Gold, so as to
permit the Transaction to qualify as a tax-deferred reorganization for
U.S. federal income tax purposes if certain technical requirements under
the U.S. Internal Revenue Code were met. Western Goldfields and New Gold
have determined that it is unlikely that these requirements were met, and
accordingly, as contemplated under the terms of the Business Combination
Agreement, have amended the Plan of Arrangement so that the merger of
Western Goldfields with a wholly-owned subsidiary of New Gold and certain
other steps will not occur. As a result, the Transaction will not qualify
as a tax-deferred reorganization for U.S. federal income tax purposes,
and U.S. shareholders of Western Goldfields generally should fully
recognize a gain or loss upon exchanging their Western Goldfields common
shares for New Gold common shares, as described in detail under the
heading "Certain United States Federal Income Tax
Considerations" in the Joint Management Information Circular
Supplement dated April 8, 2009 which is available on SEDAR.
Randall Oliphant, Ray Threlkeld, Vahan Kololian and Martyn Konig, Western
Goldfields directors have been appointed to the New Gold board of
directors and Brian Penny and Wes Hanson of Western Goldfields will join
the New Gold Management as Executive Vice President and Chief Financial
Officer, and Vice President Technical Services respectively, effective at
the closing of the Transaction.
New Gold would like to take this opportunity to thank Clifford Davis, the
departing New Gold Director, for his invaluable contributions to the
board of New Gold, and especially for his dedication to the development
of the New Afton project prior to the three-way transaction last year. New
Gold would also like to recognize and thank Gerald Ruth, outgoing Western
Goldfields director for his commitment and contributions to Western
Goldfields over the years. In addition, we would also like to extend our
gratitude and best wishes to Basil Huxham,
former Executive Vice President and Chief Financial Officer of New Gold,
who has retired. His dedication to New Gold and previously Peak Gold Ltd., has been instrumental in building a strong
intermediate gold mining company.
About New Gold
New Gold is an intermediate gold mining company, headquartered in
Vancouver, British Columbia, Canada with three operating assets; the
Mesquite Mine in the United States, Cerro San Pedro Mine in Mexico and
the Peak Mines in Australia. The newly combined company is expected to
produce between 330,000 and 360,000 ounces of gold in 2009, growing to
over 400,000 ounces in 2012 and have significant reserves and resources with
a strong portfolio of mining, development and exploration assets in
mining friendly jurisdictions. For further information on New Gold,
please visit www.newgold.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Certain information contained in this press release, including any
information relating to the transaction
and New Gold or Western Goldfields future financial or operating
performance may be deemed "forward looking". All statements in
this press release, other than statements of historical fact, that
address events or developments that New Gold or Western Goldfields
expects to occur, are "forward-looking statements". Forward-looking
statements are statements that are not historical facts and are
generally, but not always, identified by the words "expects",
"does not expect", "plans", "anticipates",
"does not anticipate", "believes",
"intends", "estimates", "projects",
"potential", "scheduled", "forecast",
"budget" and similar expressions, or that events or conditions "will",
"would", "may", "could", "should"
or "might" occur. All such forward-looking statements are
subject to important risk factors and uncertainties, many of which are
beyond New Gold or Western Goldfields' ability to control or predict. Forward-looking
statements are necessarily based on estimates and assumptions that are
inherently subject to known and unknown risks, uncertainties and other
factors that may cause New Gold or Western Goldfields' actual results,
level of activity, performance or achievements to be materially different
from those expressed or implied by such forward-looking statements. Many
of these assumptions are based on factors and events that are not within
the control of New Gold and Western Goldfields and there is no assurance
they will prove to be correct. Such factors include, without limitation:
capital requirements; fluctuations in the international currency markets
and in the rates of exchange of the currencies of Canada, the United
States, Australia, Brazil, Mexico and Chile; price volatility in the spot
and forward markets for commodities; impact of any hedging activities,
including margin limits and margin calls; discrepancies between actual
and estimated production, between actual and estimated reserves and
resources and between actual and estimated metallurgical recoveries;
changes in national and local government legislation in Canada, the
United States, Australia, Brazil, Mexico and Chile or any other country
in which New Gold and Western Goldfields currently or may in the future
carry on business; taxation; controls, regulations and political or
economic developments in the countries in which New Gold and Western
Goldfields does or may carry on business; the speculative nature of
mineral exploration and development, including the risks of obtaining
necessary licenses and permits; diminishing quantities or grades of
reserves; competition; loss of key employees; additional funding
requirements; actual results of current exploration or reclamation
activities; changes in project parameters as plans continue to be
refined; accidents; labour disputes; defective title to mineral claims or
property or contests over claims to mineral properties. In addition,
there are risks and hazards associated with the business of mineral
exploration, development and mining, including environmental hazards,
industrial accidents, unusual or unexpected formations, pressures,
cave-ins, flooding and gold bullion losses (and the risk of inadequate
insurance or inability to obtain insurance, to cover these risks) as well
as "Risk Factors" and "Risks and Uncertainties" included
in the Annual Information Form/10-K and MD&A and other filings for
each of New Gold and Western Goldfields available at www.sedar.com.
Forward-looking statements are not guarantees of future performance, and
actual results and future events could materially differ from those
anticipated in such statements. All of the forward-looking statements
contained in this press release are qualified by these cautionary
statements. New Gold and Western Goldfields expressly disclaim any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, events or otherwise,
except in accordance with applicable securities laws.
For further information please contact:
M�lanie Hennessey
Vice President Investor Relations
Direct: +1 (604) 639-0022
Toll-free: +1 (888) 315-9715
Email: info@newgold.com
Kieth Schaefer
Vanguard Shareholder Solutions
Tel: 604 608 0824
Toll Free: 1 866 398 1088
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