Northgate Minerals to price $135 million six-year convertibles to yield 3.25%-3.75%, up 25%-30%

By Rebecca Melvin

New York, Sept. 29 - Northgate Minerals Corp. plans to price $135 million of six-year convertible senior notes in the United States and Canada after the market close on Wednesday that were talked to yield 3.25% to 3.75% with an initial conversion premium of 25% to 30%, according to a syndicate source.

There is an over-allotment option for an additional $15 million of notes, which are being sold via bookrunner UBS Securities LLC.

The notes will be non-callable and will have no puts.

Northgate may, in lieu of shares upon conversion, elect to pay cash or a combination of cash and shares.

The offering is being distributed under a preliminary prospectus supplement to its base shelf prospectus dated July 2.

Proceeds will be used to finance a portion of the development costs of its Young-Davidson gold mine near Matachewan, Ont.

As of June 30, Northgate's pre-production capital cost estimate for Young-Davidson is about $339 million. Northgate's cash balance as of June 30 was about $204 million. The Young-Davidson mine is currently scheduled to begin producing gold in early 2012.

Settlement is expected Oct. 5.

Northgate Minerals is a Vancouver, B.C.-based gold and copper producer.

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