July 31, 2008 – Vancouver, BC – Goldcorp Inc.
(“Goldcorp”) (NYSE:GG, TSX:G) and Gold Eagle Mines Ltd. (“Gold Eagle”)
(TSX:GEA) today announced an agreement whereby Goldcorp will acquire,
through a friendly plan of arrangement, all outstanding shares of Gold
Eagle.
Gold Eagle’s principal asset is the world class Bruce
Channel gold discovery which is situated along the prolific Red Lake
Trend, adjacent to Goldcorp’s Red Lake gold mine and immediately
southwest of Goldcorp’s past-producing Cochenour-Willans Mine. This
transaction will enable Goldcorp to capitalize on its extensive
exploration and operations expertise in the Red Lake district and its
considerable human resources and related infrastructure.
“This transaction secures for Goldcorp full control
of 8 kilometres of strike length in the heart of the world's richest
high grade gold district,” said Kevin McArthur, Goldcorp’s President and
Chief Executive Officer. “Nearly 200 drill holes have defined an
impressive gold deposit at Bruce Channel, with potential for additional
expansion over time. Development of this strategically important zone
can now move forward with our adjoining assets as a single,
comprehensive project, sharing mine infrastructure, ore processing
facilities and human talent with Red Lake, thus minimizing capital and
operating costs and maximizing long-term shareholder value. Red Lake
mine has operated for over 50 years, and Goldcorp’s continued district
consolidation efforts are designed to sustain this world-class operation
for decades into the future. We are the natural partner to develop the
Bruce Channel project with the geographic footprint preferred by our
community.”
Under the plan of arrangement, each common share of
Gold Eagle not owned by Goldcorp will be exchanged for (i) a cash
payment in the amount of C$6.80 and (ii) 0.146 common shares of
Goldcorp, assuming full pro-ration. Gold Eagle shareholders will have
the option to elect to receive cash (on the basis of $13.60 per Gold
Eagle share), shares (on the basis of 0.292 Goldcorp shares and $0.0001
per Gold Eagle share) or any combination of cash and shares, subject to
pro-ration, with an aggregate maximum cash consideration of $691 million
and an aggregate maximum of 14.8 million common shares of Goldcorp
subject to increase on a prorated basis if Gold Eagle warrants and
options are exercised prior to the effective date of the arrangement.
The total consideration for 100% of the fully diluted shares of Gold
Eagle would be approximately $1.5 billion.
Based on the July 30, 2008 closing price and 20-day
volume weighted average price for Goldcorp’s common shares on the TSX,
and assuming full pro-ration, the transaction values each Gold Eagle
share at C$12.62 and C$13.39, respectively. On this basis, the
consideration received by Gold Eagle shareholders represents a 19%
premium to closing prices and a 36% premium to the 20-day
volume-weighted average prices for each company. The transaction is
expected to close in September, 2008.
The combination has been approved by the boards of
directors of Goldcorp and Gold Eagle and will be subject, among other
things, to the favourable vote of 66 2/3% of the Gold Eagle common
shares voted at a special meeting of shareholders called to approve the
transaction. Officers, directors and certain shareholders of Gold Eagle
representing approximately 10.5% of Gold Eagle’s outstanding shares have
entered into lock-up and support arrangements with Goldcorp under which
they have agreed to vote in favour of the transaction. Goldcorp
currently owns 4.7% of the outstanding shares of Gold Eagle. BMO Capital
Markets, Gold Eagle’s financial advisor, has provided an opinion to the
Gold Eagle Board of Directors that the consideration offered is fair,
from a financial point of view, to Gold Eagle’s shareholders. In the
event that the transaction is not completed, Gold Eagle has agreed to
pay Goldcorp a termination fee equal to C$44 million, under certain
circumstances. Gold Eagle has also provided Goldcorp with certain other
customary rights, including a right to match competing offers. Full
details of the transaction will be included in the management
information circular of Gold Eagle, to be mailed to Gold Eagle
shareholders in due course.
“We believe that Bruce Channel ranks among the very
highest quality gold discoveries,” said Simon Lawrence, President and
Chief Executive Officer of Gold Eagle. “The success we have had is a
testament to our Red Lake based exploration team and their endeavours
have helped deliver significant value to our shareholders. Goldcorp,
with their considerable infrastructure and expertise in the area, are
ideally positioned to advance the project in an expedient and capital
efficient manner. For our shareholders this is a very attractive
transaction.”
Macquarie Capital Markets Canada Ltd. acted as
financial advisor to Goldcorp Inc. and J.P. Morgan Securities Inc. acted
as strategic advisor. Cassels Brock & Blackwell LLP acted as
Goldcorp’s legal counsel.
BMO Capital Markets acted as financial advisor to
Gold Eagle and Fraser Milner Casgrain LLP acted as Gold Eagle’s legal
counsel.
Goldcorp will hold a conference call today at 10:00
a.m. (PDT) to discuss its second quarter financial results as well as
the details of the Gold Eagle acquisition. Participants may join the
call by dialing toll free 1-866-226-1799 or 416-641-6129 for calls from
outside Canada and the US. A recorded playback of the call can be
accessed after the event until September 1, 2008 by dialing
1-800-408-3053 or 416-695-5800 for calls outside Canada and the
US. Passcode: 3264804. A live and archived audio webcast will also be
available at www.goldcorp.com.
About Goldcorp
Goldcorp is the lowest-cost and fastest growing
multi-million ounce gold producer with operations throughout the
Americas. Its gold production remains 100% unhedged.
About Gold Eagle
Gold Eagle Mines Ltd. is a Canadian based junior
natural resource company developing a significant new gold discovery in
the prolific Red Lake gold camp, located in Northern Ontario, Canada.
Cautionary Note Regarding Forward-Looking Statements
Safe Harbor Statement under the United States Private
Securities Litigation Reform Act of 1995: Except for the statements of
historical fact contained herein, the information presented constitutes
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements, including but not limited to those with respect to the price
of gold, silver, copper, zinc and lead, the timing and amount of
estimated future production, costs of production, reserve determination
and reserve conversion rates involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievement of Goldcorp to be materially different from
any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others,
risks related to the integration of acquisitions, risks related to
international operations, risks related to joint venture operations, the
actual results of current exploration activities, actual results of
current reclamation activities, conclusions of economic evaluations,
changes in project parameters as plans continue to be refined, future
prices of gold, silver and copper, zinc and lead as well as those
factors discussed in the section entitled “General Development of the
Business – Risks of the Business” in Goldcorp’s Form 40-F on file with
the Securities and Exchange Commission in Washington, D.C. and
Goldcorp’s Annual Information Form on file with the securities
regulatory authorities in Canada. Although Goldcorp has attempted to
identify important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that such
statements will prove to be accurate as actual results and future events
could differ materially from those anticipated in such statements.
Readers should not place undue reliance on
forward-looking statements. For a more detailed discussion of such risks
and other factors, please refer to the respective Company websites, www.goldcorp.com and www.goldeaglemines.com.
CONTACT INFORMATION:
Goldcorp Inc.
Jeff Wilhoit
Vice President, Investor Relations
(604) 696-3074
Fax: (604) 696-3001
Email: info@goldcorp.com
Website: www.goldcorp.com
CONTACT INFORMATION:
Gold Eagle Mines Ltd.
Simon Lawrence
President and Chief Executive Officer
(416) 867-8998
Suzette Ramcharan
Investor Relations
(416) 867-8998