New Gold Inc., which mines gold in North America and Australia, said Monday it is buying Canada's Silver Quest Resources Ltd. in a stock deal worth about $130 million.
The all-stock deal, expected to be completed by the end of the year, lets New Gold consolidate its ownership of the Blackwater Project in British Columbia and expands its presence in the area significantly, the Vancouver-based company said.
It also gives New Gold access to Silver Quest's White Gold District assets in the Yukon.
As part of the takeover, New Gold is forming a company called McIntyre Minerals Inc., in which New Gold will hold a 9.9 percent stake and Silver Quest the remaining interest.
The companies said they expect McIntyre to have about $15 million in cash to fund an aggressive two-year exploration program focused on Silver Quest's 3Ts Gold Project in the Nechako Plateau region of central British Columbia and a number of Yukon exploration properties.
New Gold owns properties across the Americas and in Australia. The Mesquite Mine, which is in the U.S., the Cerro San Pedro Mine in Mexico and Peak Gold Mines in Australia are expected to produce between 380,000 and 400,000 ounces of gold in 2011.
New Gold's fully funded New Afton project in Canada is scheduled to add further growth in 2012. In addition, New Gold owns 30 percent of the world-class El Morro project located in Chile and, in June 2011, New Gold acquired the Blackwater project in Canada.
Shares of New Gold were down about 3.6 percent in midday trading.