Hydro operator Coast Mountain agrees to acquisition by NovaGold

NovaGold Resources Inc. and Coast Mountain Power Corp. have entered into a definitive agreement for NovaGold to acquire all outstanding common shares and stock options of Coast Mountain, developer of three hydro projects in British Columbia.

NovaGold said the total value of the transaction is C$45 million (US$41 million) to win control of Coast Mountain, which is developing projects near NovaGold’s Galore Creek copper-gold project. NovaGold said there are significant development synergies with Galore Creek that will add value to both assets over time.

Coast Mountain’s largest asset is the 115-MW Forrest Kerr project on the Iskut River, which is designed to generate electricity for the BC Hydro grid. It also is developing 60- to 70-MW More Creek and 55- to 60-MW Mclymont Creek.

Under the plan announced May 26, Coast Mountain shares will be exchanged for NovaGold shares at a ratio valued at C$2.20 (US$2) per Coast Mountain share. NovaGold said that is a significant premium to the price of Coast Mountain shares prior to NovaGold’s overture.

NovaGold also agreed to buy a C$1 million (US$910,000) secured debenture of Coast Mountain to fund costs related to Forrest Kerr’s development prior to completion of the transaction.

In view of the plan, NovaGold said it would not proceed with an unsolicited takeover bid announced April 13. Coast Mountain said it would no longer solicit competing proposals.

The deal will require approval by two-thirds of Coast Mountain shareholders at a special meeting to be held by July 31. It also is subject to court and regulatory approvals and to other conditions.

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