Monday March 8, 7:36 am Eastern Time
Company Press Release
Homestake Mining Company to Acquire Argentina Gold
VANCOUVER, BRITISH COLUMBIA--Argentina Gold Corp. (VSE: ARP - news) and Homestake Mining Company (NYSE:HM - news; NYSE: HM, ASX: HSM, TSE: HCX) today announced a definitive agreement for Homestake to acquire Argentina Gold Corp. for approximately U.S. $200 million (C$300 mill ion) in Homestake common stock. Argentina Golds' principal asset is its 60 percent interest in the Veladero property located in northwest Argentina along the El Indio gold belt. Argentina Gold's resource estimate indicates that Veladero's three mineral ized zones contain at least 4.5 million ounces of gold and 100 million ounces of silver.
In addition to the Veladero project, Argentina Gold's holdings include the very promising Del Carmen project and the Rio Frio, Santa Rosa and Vicuna Pampa prospects. Argentina Gold's land package encompasses an entire mining district and covers more tha n 80 percent of the rich El Indio gold belt in Argentina.
Under the terms of the agreement, Argentina Gold shareholders will receive .545 shares of Homestake common stock for each share of Argentina Gold common stock. Based on the closing price for Homestake common stock on Friday, March 5, 1999, the transacti on values each Argentina Gold share at U.S.$5.14 or C$7.81. Homestake will issue approximately 21 million additional shares, which is equal to about 8.8 percent of Homestake's currently outstanding shares. The transaction will be accounted for as a poo ling of interests. Directors of Argentina Gold, representing approximately 15 percent of currently outstanding Argentina Gold stock, have stated their intention to vote in favour of the transaction.
''Argentina Gold and its unique Veladero site, presents a tremendous opportunity for Homestake'', said Jack E. Thompson, Chairman, President and Chief Executive Officer of Homestake. ''Based on recent independent surveys and our own due diligence, we belie ve that the Veladero property is a superb gold asset with exceptional upside potential. While only 30 percent of the project area has been explored, the resources defined to date and the consistently favourable metallurgical tests suggest that Veladero' s resources could grow significantly. If Veladero meets our expectations, it will develop into a very significant producer at an attractive cash cost. This acquisition strengthens our operating base in South America where we are currently evaluating th e feasibility of expanding our operations at La Falda in Chile with ore from the adjacent Jeronimo deposit. It makes Latin America Homestake's fourth growth pillar after the U.S., Canada and Australia without appreciably altering our conservative geo-po litical risk profile.''
Lukas H. Lundin, Director of Argentina Gold stated, ''This is an excellent transaction for Argentina Gold's shareholders, representing a full and fair price, and offering the opportunity to participate in the upside of a well managed, international gold p roducer.''
''Throughout the acquisition discussions, the Special Committee of the Board of Directors of Argentina Gold has focused on ensuring that Argentina Gold's shareholders received full value for their shares. Homestake's bid for Argentina Gold is a fair offe r that provides excellent value for our shareholders'', stated William A. Rand, Director and Chairman of the Special Committee of the Directors for Argentina Gold.
Homestake and Argentina Gold have agreed to complete the acquisition as a plan of arrangement under the Canada Business Corporations Act. Completion of the transaction is subject to approval by the Argentina Gold shareholders, The British Columbia Supre me Court and further due diligence. The transaction is expected to close in May, 1999.
Following completion of the acquisition, Homestake will carry out an intense drill program to increase reserves and resources at Veladero. In addition, work will begin to determine optimal design parameters for the mining and processing of ore from this
deposit. Homestake expects to spend approximately $6 million for its share of additional drilling and a feasibility study during 1999.
Homestake Mining Company is an international gold mining company with operations and exploration activities in the United States, Canada, Australia and Chile. The Company also has active exploration programs in Latin America and Eastern Europe. Homesta ke currently produces approximately 2.3 million ounces of gold annually from 16 operating mines. Shares of the Company's stock are listed on the New York Stock Exchange, the Australian Stock Exchange and the Basel, Geneva and Zurich Stock Exchanges in Switzerland. Homestake began gold mining operations over 120 years ago, and is the oldest listed company on the New York Stock Exchange still in its original business. It has received numerous industry awards for its responsible environmental health an d safety management programs
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