VANCOUVER, July 31 /CNW/ - Goldcorp Inc. (NYSE:GGand Gold Eagle
Mines Ltd. ("Gold Eagle") (TSX:GEA) today announced an
agreement whereby Goldcorp will acquire, through a friendly plan of
arrangement, all outstanding shares of Gold Eagle.
Gold Eagle's principal asset is the world class Bruce Channel gold
discovery which is situated along the prolific Red Lake Trend, adjacent to
Goldcorp's Red Lake gold mine and immediately southwest of Goldcorp's
past-producing Cochenour-Willans Mine. This transaction will enable Goldcorp
to capitalize on its extensive exploration and operations expertise in the Red
Lake district and its considerable human resources and related infrastructure.
"This transaction secures for Goldcorp full control of 8 kilometres of
strike length in the heart of the world's richest high grade gold district,"
said Kevin McArthur, Goldcorp's President and Chief Executive Officer. "Nearly
200 drill holes have defined an impressive gold deposit at Bruce Channel, with
potential for additional expansion over time. Development of this
strategically important zone can now move forward with our adjoining assets as
a single, comprehensive project, sharing mine infrastructure, ore processing
facilities and human talent with Red Lake, thus minimizing capital and
operating costs and maximizing long-term shareholder value. Red Lake mine has
operated for over 50 years, and Goldcorp's continued district consolidation
efforts are designed to sustain this world-class operation for decades into
the future. We are the natural partner to develop the Bruce Channel project
with the geographic footprint preferred by our community."
Under the plan of arrangement, each common share of Gold Eagle not owned
by Goldcorp will be exchanged for (i) a cash payment in the amount of C$6.80
and (ii) 0.146 common shares of Goldcorp, assuming full pro-ration. Gold Eagle
shareholders will have the option to elect to receive cash (on the basis of
$13.60 per Gold Eagle share), shares (on the basis of 0.292 Goldcorp shares
and $0.0001 per Gold Eagle share) or any combination of cash and shares,
subject to pro-ration, with an aggregate maximum cash consideration of $691
million and an aggregate maximum of 14.8 million common shares of Goldcorp
subject to increase on a prorated basis if Gold Eagle warrants and options are
exercised prior to the effective date of the arrangement. The total
consideration for 100% of the fully diluted shares of Gold Eagle would be
approximately $1.5 billion.
Based on the July 30, 2008 closing price and 20-day volume weighted
average price for Goldcorp's common shares on the TSX, and assuming full
pro-ration, the transaction values each Gold Eagle share at C$12.62 and
C$13.39, respectively. On this basis, the consideration received by Gold Eagle
shareholders represents a 19% premium to closing prices and a 36% premium to
the 20-day volume-weighted average prices for each company. The transaction is
expected to close in September, 2008.
The combination has been approved by the boards of directors of Goldcorp
and Gold Eagle and will be subject, among other things, to the favourable vote
of 66 2/3% of the Gold Eagle common shares voted at a special meeting of
shareholders called to approve the transaction. Officers, directors and
certain shareholders of Gold Eagle representing approximately 10.5% of Gold
Eagle's outstanding shares have entered into lock-up and support arrangements
with Goldcorp under which they have agreed to vote in favour of the
transaction. Goldcorp currently owns 4.7% of the outstanding shares of Gold
Eagle. BMO Capital Markets, Gold Eagle's financial advisor, has provided an
opinion to the Gold Eagle Board of Directors that the consideration offered is
fair, from a financial point of view, to Gold Eagle's shareholders. In the
event that the transaction is not completed, Gold Eagle has agreed to pay
Goldcorp a termination fee equal to C$44 million, under certain circumstances.
Gold Eagle has also provided Goldcorp with certain other customary rights,
including a right to match competing offers. Full details of the transaction

will be included in the management information circular of Gold Eagle, to be
mailed to Gold Eagle shareholders in due course.
"We believe that Bruce Channel ranks among the very highest quality gold
discoveries," said Simon Lawrence, President and Chief Executive Officer of
Gold Eagle. "The success we have had is a testament to our Red Lake based
exploration team and their endeavours have helped deliver significant value to
our shareholders. Goldcorp, with their considerable infrastructure and
expertise in the area, are ideally positioned to advance the project in an
expedient and capital efficient manner. For our shareholders this is a very
attractive transaction."
Macquarie Capital Markets Canada Ltd. acted as financial advisor to
Goldcorp Inc. and J.P. Morgan Securities Inc. acted as strategic advisor.
Cassels Brock & Blackwell LLP acted as Goldcorp's legal counsel.
BMO Capital Markets acted as financial advisor to Gold Eagle and Fraser
Milner Casgrain LLP acted as Gold Eagle's legal counsel.
Goldcorp will hold a conference call today at 10:00 a.m. (PDT) to discuss
its second quarter financial results as well as the details of the Gold Eagle
acquisition. Participants may join the call by dialing toll free
1-866-226-1799 or 416-641-6129 for calls from outside Canada and the US. A
recorded playback of the call can be accessed after the event until September
1, 2008 by dialing 1-800-408-3053 or 416-695-5800 for calls outside Canada and
the US. Passcode: 3264804. A live and archived audio webcast will also be
available at