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Merger Q & A

  1. What are the exchange ratios for Peak Gold Inc. and Metallica Resources Inc. shareholders? What percentage of the new company will be held by Peak Gold and Metallica Resources Inc. shareholders?

    Peak Gold shareholders will receive 0.1 common share of New Gold for each Peak Gold share representing approximately 37.8% of the combined company. Metallica shareholders will receive 0.9 common share of New Gold for each Metallica resources share, representing approximately 45.7% of the consolidated company.

  2. What price to NAV multiples are Peak and Metallica shareholders receiving for their shares?

    • Based on analyst consensus NAV:
      • 0.87xNAV for PIK
      • 1.01xNAV for MR

  3. Are these prices in line with those of other transaction?

    • The prices are in line with those of other transactions

  4. What will happen to the options, two sets of warrants and New Gold's convertible debenture?

    It is expected that the common shares for both Peak Gold and Metallica will begin trading as New Gold (TSX and AMEX: NGD) at market open on July 7, 2008. In addition, it is expected that the warrants for both Peak Gold and Metallica will begin trading as New Gold on the TSX at market open on July 7, 2008. The New Gold warrant trading symbols and terms are summarized as follows:

    Former Symbols/Cusip#Former TermsNew Symbols/Cusip#New Terms
    NGD.WT
    Cusip No. 644535122    		1 warrant + $15.00 = 1 common share expiry June 28, 2017NGD.WT.A
    Cusip No. 644535122    		Same as former terms
    PIK.WT
    Cusip No. 70468J140    		Ex.: 1 warrant + $1.50 = 1 Peak Gold common share; expiry April 3, 2012NGD.WT.B
    Cusip No. 644535130    		Ex: 10 warrants + $15.00 = 1 New Gold common share plus $0.001 per common share; expiry April 3, 2012
    PIK.WT.A
    Cusip No. 70468J130    		Ex.: 1 warrant + $0.90 = 1 Peak Gold common share; expiry November 28, 2012 NGD.WT.C
    Cusip No. 644535148    		Ex.: 10 warrants+ $9.00 = 1 New Gold common share plus $0.001; expiry November 28, 2012
    MR.WT
    Cusip No. 59125J120     		Ex.: 1 warrant + $3.10 = 1 Metallica  common share expiry December 11, 2008NGD.WT.D
    Cusip No. 644535155    		Ex.: 1.1 warrants + $3.44 = 1 New Gold common share plus $0.0001; expiry December 11, 2008

  5. What will the tax ramifications of this Transaction be?

    The deadline for sending the Tax Election information was September 28, 2008.  For more information, please email New Gold Inc. at info@newgold.com.  

  6. Will the combined company be trading on the TSX or any other exchanges?

    • TSX and AMEX

  7. What is the number of shares outstanding for the combined company?

    • Basic: 208.2 million
    • Fully diluted "and in the money": 234.6 million

  8. Where is the head office located?

    • Vancouver

  9. Who will be the Board and Management team of the combined company?

    • See the Company section of the website.

  10. Was a shareholder meeting and vote required for one or all three companies?

    • Peak and Metallica were required to hold shareholder votes, where 66 and 2/3 had to be in favour of the transaction. New Gold was not required to hold a shareholder vote, however, given the large amount of shares being issued New Gold decided to hold a shareholder vote. In that case, 50% +1 of votes had to be in favour of the transaction.

  11. The transaction was conditional on certain amendments to the Company's note indenture. Can you elaborate on what those amendments were?

    • The amendments required, brought the indenture in line with similar debt structure for a multi-asset mining company.

  12. What are the benefits to the shareholders?

    For Metallica, the Transaction:
    • Diversifies gold production with multiple producing mines;
    • Enhances production growth profile in the medium term;
    • Provides shareholders with a significant stake in the combined company; and
    • Ensures availability of the necessary funding for the development of El Morro.
    For New Gold, the Transaction:
    • Adds quality assets to New Gold's long-term growth plan;
    • Delivers immediate cash flows from producing gold mines;
    • Increases New Gold's leverage to the current price environment; and
    • Provides sufficient funding to bring the New Afton project into production.
    For Peak Gold, the Transaction:
    • Improves production profile through diversification of producing assets;
    • Significantly increases reserves and resources;
    • Increases exposure to the strong commodity cycle;
    • Broadens value growth spectrum with development and exploration stage assets; and
    • Provides shareholders with a significant stake in the combined company.

  13. What will be the new production profile for the combined company?

  14. What will be the cash cost?

  15. What will be the combined company's strategy going forward?

    • Delivery on operational targets (production, cost, safety and social responsibility)
    • Internal growth through the construction and development of the New Afton property and the review of the Amapari processing alternatives
    • External growth through acquisitions of operations producing 100,000 - 200,000 ounces per year

  16. How will the combined company finance the construction of the New Afton project and provide adequate funding for the development of El Morro?

    • The new company should have sufficient cash and cash flow from operations to fund the development of New Afton (including the 20% increase in CAPEX), the El Morro project and other exploration efforts.
    • All current operations can fully leverage the current commodity price environment as all production is hedge free

  17. Will there be "synergy" savings from the transaction?

    • Modest head office savings.
    • Technical capabilities much stronger.

  18. Is the new company spreading its operating teams too thin across these operating geographies?

    • Operating teams are already in place at each operation
    • The company will have operating assets in several mining friendly jurisdictions, reducing operational, political and regulatory risks
    • With the exception of the Peak Mines, which has a substantial operating history, all of the combined company's production and near-production assets are located in the Americas

  19. How will the combined company address the ABCPs?

    • Continually monitor the situation.

  20. What are the Reserves and Resources of the new company?