Northgate hits roadblock in bid for Aurizon

Vancouver – The Supreme Court of British Columbia has granted a permanent injunction prohibiting Northgate Minerals (NGX-T, NXG-X) from proceeding with an unsolicited takeover bid for Aurizon Mines (ARZ-T, AZK-X) until October 19, 2006.

The Supreme Court ruled in favor of Aurizon, which alleged that Northgate’s offer breached a confidentiality and standstill agreement entered into on October 19, 2005, after Northgate approached Aurizon with a proposal for a friendly merger that was subsequently rejected.

Earlier this spring, Northgate made an unsolicited bid to acquire all the issued and outstanding shares of Aurizon on the basis of 0.741 of a Northgate common share for each Aurizon common share. Aurizon urged its shareholders to reject the offer, which it described as “inadequate” and “opportunistic.” The company also expressed “serious concerns” about Northgate’s violation of the confidentiality and standstill agreement, which among other things, prohibited Northgate from acquiring shares of Aurizon for one year.

Aurizon initiated legal proceedings to enforce the standstill agreement, and successfully obtained a court injunction preventing Northgate from pursuing the bid for the one-year timeframe. Northgate says it will appeal the decision and also seek a stay of the injunction pending the outcome of the appeal.

Northgate’s core asset is the Kemess South copper-gold open-pit mine in northern British Columbia, while its main development asset is the adjacent Kemess North deposit, now in the permitting stage. The company is also advancing the past-producing Young-Davidson gold mine project in the Matachewan camp of Ontario.

Aurizon’s primary asset is the past-producing Casa Berardi gold mine in Quebec’s Abitibi district. The company recently raised $126 million of debt and equity financing to bring Casa Berardi back into production at an annual rate of about 175,000 oz. gold, starting later this year.

Aurizon is conducting an underground and surface exploration program to expand resources while it continues development activities at Casa Berardi. Five underground rigs (two for exploration and three for definition drilling) are turning on site, along with two surface exploration rigs.

Positive results were reported from the first holes testing the Lower Inter zone, where an access drift was completed earlier this spring. Highlights (uncut) include 25.6 grams gold per tonne over 48.2 metres, 22.9 grams over 12.4 metres, 19.8 grams over 7.8 metres, and 17.6 grams over 45.5 metres.

Positive results were also returned from a definition drill program on Zone 113, aimed at outlining and having ready for blasting three months of stope production before mine startup. Selected highlights from this program include: 45.8 grams gold per tonne over 12.7 metres; 38.6 grams over 11.7 metres; 33.2 grams over 7.8 metres; 23.1 grams over 19.7 metres; 24.4 grams over 18.4 metres; and 26.1 grams over 13.5 metres.

The company recently discovered a new mineralized quartz vein 900 metres east of Zone 113, with the first hole returning 8.3 grams gold over 14.7 metres. Assays are pending for a second hole that intersected a 15.2-metre quartz vein, 50 metres east of the discovery hole.

A feasibility study with updated resources and reserves is expected to be completed by year-end.