Northgate Minerals Announces Exercise of Over-Allotment Option

by Zagros on October 12, 2020

Canada Newswire    ”Canada Newswire English ”
VANCOUVER ,  Oct. 12  /CNW/ -  Northgate Minerals Corporation  (TSX: NGX, NYSE Amex: NXG) (“Northgate”) announced today that the underwriters of its previously announced offering of 3.50% convertible senior notes due 2016 have exercised their  US$20 million  over-allotment option in full, increasing the total offering size to  US$170 million . As a result, Northgate expects to receive net proceeds from the offering of approximately  US$163.5 million  after deducting the underwriters’ commission and expenses of the offering. Closing of the over-allotment option is expected to occur on or about  October 15, 2020 .

As previously announced, Northgate intends to use the net proceeds of the offering to finance a portion of the  US$339 million  pre-production development cost of its  Young - Davidson  gold mine near  Matachewan, Ontario , which is currently scheduled to begin producing gold in early 2012.

“With the success of this financing, Northgate now has sufficient funds to develop  Young - Davidson , meaning that a key milestone for the Company has been achieved through one of the least dilutive means possible” said  Ken Stowe , President and CEO. “Our intention is to settle the notes by delivery of cash, and with production at  Young - Davidson  scheduled to commence in 2012, we fully expect the mine to generate more than enough free cash flow to repay the convertible notes prior to their maturity in 2016, such that there will be no need to issue shares upon conversion.”

Prior to  July 2016 , the notes are only convertible into common shares upon the occurrence of a limited number of specified events, none of which is solely within the control of the note holder. In the event that an early conversion right is triggered, any shares issued by Northgate would be priced at a significant premium to Northgate’s current share price.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Convertible Notes in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.

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