Wednesday, 24th May 2006 (3053 views)

Northgate Minerals, a Vancouver mining corporation, has made an unsolicited bid worth around $390 million for smaller Canadian company Aurizon Mines, in an attempt to create an operation with a market value of over $1 billion and secure the chance to grow.

Northgate has its eye on an Aurizon project under development, Casa Berardi in Quebec, from which production is expected later this year.

Northgate says it would help to fund the Casa Berardi project, whose production revenue would then contribute to the development of a mine in Ontario over the next four years.

Combining resources under a deal would enable Northgate to increase its gold production by almost 200,000 ounces a year.

The larger company confirmed in a conference call that it had put a similar proposal to Aurizon last year, but their target was "not interested" at that stage.

Northgate's all-share approach values Aurizon at $2.7 per share. Investors would receive 0.741 Northgate shares for each share in Aurizon according to the proposal.

On the Toronto Stock Exchange, shares in Aurizon rose by more than 38 per cent following news of the offer, with some speculating that Northgate's move will invite rival bids.

 

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