NEW GOLD - Toronto symbol NGD

NEW GOLD $6.63 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold.com; Shares outstanding: 476.9 million; Market cap: $3.2 billion; No dividends paid) has just agreed to buy Rainy River Resources (Toronto symbol RR) in a friendly takeover for $381.9 million.

Rainy River’s project in northwestern Ontario could hold as much as 4.0 million ounces of gold. The company has already completed a feasibility study that projects a mine producing 225,000 ounces annually for 16 years. Production could start as early as 2016.

New Gold produced 411,892 ounces of gold in 2012. That could top 1 million ounces within six years, even without Rainy River.

After buying Rainy River, New Gold will still hold cash of around $564 million. That will let it keep investing in new projects and making acquisitions like Rainy River at today’s bargain prices.

New Gold is a buy.

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