Greenstone Merger Candidate Seen As Cash-Rich, Project-Poor
By LORI MCLEOD
Dow Jones Newswires
TORONTO -- A "cash-rich, project-poor" company is the most likely candidate to want to merge with Greenstone Resources Ltd. (GRERF), David Thomas, an analyst with Griffiths, McBurney & Partners, told Dow Jones.
Thomas said Greenstone has "good assets" and could attract a suitor that wants to increase its low-cost production and isn't concerned about operating in "risky places."
Toronto-based Greenstone is a gold mining company with assets in Honduras, Nicaragua and Panama.
Late Tuesday, Greenstone said it had retained Nesbitt Burns Inc. as adviser to help it identify and evaluate alternatives to enhance shareholder value.
Thomas said the announcement was probably made because "something is close to happening." A merger is the most likely option, with a hostile takeover or asset sale highly unlikely, he added.
In its news release, Greenstone said it hired Nesbitt Burns "in response to expressions of interest by several mining companies."
Thomas said a large company like Placer Dome Inc. (PDG) or Barrick Gold Corp. (ABX) won't be interested in Greenstone, but after that, "anyone could be."
No other Canadian companies have expertise similar to Greenstone's in these areas, Thomas said. However, at least one Canadian company has expressed interest in Greenstone, Thomas added. He refused to elaborate.
In Toronto, Greenstone's shares are up 0.14, or 8.3%, at 1.83, on volume of about 239,000 shares.
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