New Gold is to acquire all outstanding common shares of Richfield Ventures for C$550m, under a definintive agreement.
According to the agreement, each Richfield shareholder will receive 0.9217 of a New Gold share for each Richfield share held.
Richfield Ventures owns Blackwater project in British Columbia, which has 1.8 million ounces of indicated gold resources and 2.0 million ounces of inferred gold resources.
The transaction is expected to close in June this year with Richfield shareholders owning about 10.4% of New Gold on a fully diluted in-the-money basis.
Richfield has agreed to pay New Gold a termination fee of C$18m, if the transaction is not completed.