Barrick to launch takeover bid for NovaGold
2006-07-24 09:12 ET - In the News
See News Release (C-ABX) Barrick Gold Corp
Mr. Greg Wilkins of Barrick reports
BARRICK ANNOUNCES CASH OFFER FOR NOVAGOLD
Barrick Gold Corp. intends to make an offer to acquire all the outstanding shares of NovaGold Resources Inc. in order to consolidate its interest in the Donlin Creek project in Alaska and acquire 100 per cent of the Galore Creek project in British Columbia. The proposed transaction is valued at approximately $1.29-billion (U.S.), or $1.53-billion (U.S.) on a fully diluted basis. The all-cash offer of $14.50 (U.S.) per share represents a premium of 24 per cent over the July 21, 2006, closing price of NovaGold's shares on the American Stock Exchange. All currency figures in U.S. dollars unless otherwise specified.
"Having successfully acquired and integrated the Placer Dome mines into our portfolio, the acquisition of NovaGold's assets will consolidate our interest in the Donlin Creek project and add another quality project to our unrivalled pipeline," said Greg Wilkins, Barrick president and chief executive officer. "The acquisition of NovaGold will significantly strengthen our mineral resource base and enhance our North American foundation of quality assets."
Highlights include:
NovaGold shareholders to receive $14.50 (U.S.) per share in cash;
offer represents a premium of 24 per cent based on the last NovaGold closing price;
Barrick's offer to acquire Pioneer will consolidate land position in the Galore Creek district; and
measured and indicated gold resources in North America to rise by 54 per cent -- strengthening Barrick's quality assets in the region.
The NovaGold assets include:
a 30-per-cent interest in Donlin Creek -- Barrick acquired its right to earn up to a 70-per-cent interest as part of the January, 2006, acquisition of Placer Dome. According to information previously provided by Placer Dome at year-end, 2005, Donlin Creek had 14.8 million ounces of measured and indicated gold resources, and 13.6 million ounces of inferred gold resources. Barrick is currently completing a detailed technical review of the project while continuing to advance the feasibility study process and conducting regional exploration programs;
a 100-per-cent interest in Galore Creek -- Located in northwestern B.C. and 75 kilometres northwest of Barrick's Eskay Creek mine, Galore Creek has measured and indicated resources of six million ounces of gold, 75.4 million ounces of silver, 6.8 billion pounds of copper, as well as inferred resources of 7.2 million ounces of gold, 73.4 million ounces of silver and five billion pounds of copper (according to publicly available information issued by NovaGold as of February, 2006);
the Nome operations in Alaska, which include the Rock Creek, Big Hurrah and Nome gold projects. Also in Alaska, NovaGold has an option to acquire a joint venture interest in the Ambler project from Rio Tinto PLC, and a portfolio of earlier-stage exploration projects; and
approximately $200-million in cash (as at May 31, 2006) and a portfolio of investments.
The acquisition will significantly add to Barrick's North American portfolio. Pro forma measured and indicated gold resources in North America would rise 54 per cent to 34.7 million ounces, inferred gold resources would rise by 89 per cent to 28.2 million ounces.
In a separate news release on this date, Barrick and Pioneer Metals Corp. entered an agreement under which Pioneer agreed to recommend that its shareholders tender their shares to Barrick's cash offer to acquire all of the common shares of Pioneer at a price of $1 per Pioneer share. Pioneer's directors and officers and certain shareholders, representing over 40 per cent of the Pioneer shares (on a fully diluted basis), have agreed to tender their shares under a lock-up arrangement. The value of the Pioneer transaction is approximately $64.7-million in cash on a fully diluted basis. Pioneer has a portfolio of exploration properties and interests, including the Grace property which is adjacent to NovaGold's Galore Creek project. The consolidation of the land position around the Galore Creek project will facilitate its development.
"The acquisition of the remaining 30 per cent in the Donlin Creek project and the Galore Creek project fits with our strategic plans to further strengthen our project pipeline and meet the challenge of growing our reserve and resource base," said Mr. Wilkins. "Our strong balance sheet gives us the ability to finance this acquisition with cash, thereby increasing our per-share leverage to gold and copper."
Barrick will be releasing its second-quarter results on Wednesday, Aug. 2, 2006, and is on schedule with its 2006 production and cash-cost guidance. The company will be updating the investment community on its overall project pipeline later this year.
Full details of the offer will be included in the formal offer and takeover bid circular to be filed with the securities regulatory authorities and mailed to NovaGold shareholders. Barrick expects to have the takeover bid documents filed as soon as possible. The offer will be open for acceptance for at least 35 days following the commencement of the offer. The offer will be subject to certain conditions, including receipt of all necessary regulatory clearances, absence of material adverse changes and acceptance of the offer by NovaGold shareholders owning not less than 75 per cent of the NovaGold common shares on a fully diluted basis. Once the 75-per-cent acceptance level is met, Barrick intends, but is not required, to take steps to acquire all outstanding NovaGold common shares.
Barrick's financial advisers are CIBC World Markets Inc. Its legal advisers are Davies Ward Phillips & Vineberg LLP and Lawson Lundell LLP in Canada as well as Cravath, Swaine & Moore LLP in the U.S.
Conference call and webcast
The investment community is invited to participate in Barrick's conference call and webcast as follows.
Monday, July 24, 2006, at 11 a.m. (EDT)
Toll-free: 888 |
