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AuRico Gold Paying Cheap Valuation For Northgate Takeover

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AuRico Gold Inc. (AUQ.TO) is paying the cheapest valuation for a takeover of a North American gold producer in seven years even as bullion trades at a record, according to Bloomberg.

The Halifax, Nova Scotia-based company that mines the precious metal in Mexico agreed yesterday to buy Northgate Minerals Corp. (NGX.TO) of Vancouver for $1.28 billion in stock to add production in Canada and Australia. Including net cash, AuRico's acquisition valued Northgate at 14.7 times earnings before interest, taxes, depreciation and amortization, the lowest since 2004 for a North American deal worth more than $1 billion, according to data compiled by Bloomberg.

AuRico is paying about 64 per cent less per dollar of earnings than Canadian rival Kinross Gold Corp. (K.TO) did for Red Back Mining Inc. a year ago, even after gold surged to a high of US$1,913.50 an ounce last week.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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