Like I said, memory fades, (I really did remember it the other way) but I indeed hope you are right about Merukh. I never could stand the role he played in taking down BXM several notches while helping to position Barrick. He deserves nada but I still maintain he will weasel his way somehow into a settlement that will be costly, but not too costly. Incidentally, BXM site has posted a few more buy recommendations from brokers. Here's one:
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BRE-X MINERALS LTD. (BMX -$23.20)
Speculative Buy - January 15, 1997
Chad Williams P. Eng (514) 281-1800
Per Share Data
Target Price (one year)$30.00
Projected Return: 29%
HIGHLIGHTS
Placer announces share offer for Bre-X. Perhaps Bre-X shareholders now have an alternative to the Barrick offer. There may be other bidders in the wings. Merukh files $2 billion lawsuit. We remain skeptical of his claims. Bre-X remains a speculative BUY.
COMMENTARY
In a letter to David Walsh, president and chief executive, John Willson, said Placer Dome " would like to commence negotiations immediately to enter into a tax-effective, stock-for-stock merger-of-equals at a significant premium to the current market price, accounted for as a pooling of interests, in which all of the outstanding shares of Bre-X common stock would be exchanged for a fixed number of shares of Placer Dome common stock."
The letter said, "We are prepared to participate immediately in discussions between you, the Indonesian government and your partners in Busang with a view to resolving the Contract of Work and the ownership interests of the mine. We believe Placer Dome will be a welcome partner in Busang due to our extensive international experience which includes construction $3.5 billion in mines since
1985, of which 1.1 billion was in Papua New Guinea in the period 1989-92"
"We are currently contemplating constructing a facility at Busang in up to 4 modules, each of 50,000 tonnes per day capacity over a four year period. This would be completed at an aggregate cost of up to US$ l.7 billion which will be financed by the merged entity. The ultimate scale will be contingent upon additional data collection and studies carried out in the first nine months."
Placer Dome said its proposal would be subject to negotiation with Bre-X and the Indonesian government, customary due diligence procedures, issuance of a suitable Contract of Work, satisfactory resolution of ownership issues, and regulatory and shareholder approvals.
Placer Dome Inc. said that Indonesia officials were made aware of its
proposals to merge with Bre-X Minerals Ltd. before the proposal was
submitted Monday to Bre-X.
Placer's proposal calls for the creation of a new company through the pooling of Placer and Bre-X shares, which would result in Placer shareholders holding around 55% of the merged company and Bre-X shareholders controlling about 45%. Placer Dome will not decide precisely how many shares it will offer for each Bre-X Minerals common shares until it negotiates with Bre-X.
Placer's plan would have the Indonesian government and Bre-X's Indonesia partners sharing a 40% stake in the company created to own the gold deposit. An allocation of the 40% stake may also be offered to the Indonesian public. Placer indicated clearly that this 40% stake would not be a gift, consideration in one form or another would be required.
What does all this mean? In our opinion, Placer's move indicates that the Indonesian government has possibly revised its plans regarding the sale of the Busang deposit. We believe that a company such as Placer would not announce such a large transaction unless it was given substantial encouragement from the Indonesian authorities to do so.
On the less favorable side, Placer indicated that it "may take weeks and perhaps months for the process to unwind".
We view this latest development as positive for Bre-X in that perhaps its shareholders may be given an alternative to the Barrick bid.
In other news, Indonesian businessman, Jusuf Merukh, files a $2 billion lawsuit in Canada against Bre-X regarding an ownership dispute over the Busang gold find in Kalimantan. He added that he would withdraw the suit if Bre-X agreed to this ownership claim. Merukh claims that two companies he is associated with, PT Krueng Gasui and PT Sungai Atan Perdana, said they were left out of the exploration program that led to the discovery of the Southeast Busang gold find.
The lawsuit was filed in the Court of Queen's Bench of Alberta by PT Krueng Gasui, which is claiming a 10 percent interest in the Southeast Busang find along with an option on an additional 20 percent. The suit arises out of a 1987 joint venture known as PT Westralian Atan Minerals, consisting of Merukh's two firms, each with a 10 percent interest, and a Australian company, Westralian Resources Projects Ltd., with an 80 percent interest. Allegedly there was a failure of fiduciary obligations to act in the best interests of Merukh and his firm and an alleged misuse of confidential information.While we cannot dismiss such a significant lawsuit, we remain skeptical of Merukh's claim. We base our conclusions on discussions with senior officials of
Bre-X, Golden Valley Mines ( who are acting on Merukh's behalf), and the Indonesian Ministry of Mines & Energy.
We maintain our speculative BUY rating on Bre-X; our target price is $30. We also maintain our speculative BUY rating on Bresea (BSR-$11.20), a company with a 23% equity stake in Bre-X. Our target on Bresea is $22.
The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness Is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. A copy of the firm's statement of financial condition, along with a list of partners, directors and senior officers is available on request. . |
