Newmont Not Bidding
FOCUS-Barrick takeover bid gets last-minute boost
(updates with Barrick, analyst comments)
By Paul Simao
TORONTO, Jan 28 (Reuters) - Canada's Barrick Gold Corp. (Toronto:ABX.TO - news) took off the gloves on Thursday as it fought to push through a hostile takeover of Vancouver-based Argentina Gold Corp. (Vancouver:ARP.V - news). just hours before its offer was due to expire.
The two Canadian companies have been embroiled in a bitter war of nerves since December when Barrick launched a surprise bid for control of its high-flying rival and the prized Veladero gold mine in northwestern Argentina.
Toronto-based Barrick, which already owns 9.9 percent of Argentina Gold and 40 percent of Veladero, seemed to gain the upper hand late on Wednesday when the British Columbia Securities Commission threw out Argentina Gold's recently adopted shareholder rights plan, or ''poison pill''.
Argentina Gold adopted the plan two weeks ago to buy time in its ambitious search for an alternative to Barrick's C$5.00-a-share, or C$160-million, takeover offer.
Delighted Barrick officials <<as*holes>> bluntly warned Argentina Gold shareholders they would be left out in the cold if 50.1 percent of all outstanding common shares were not controlled by Barrick before the deadline just after midnight on Thursday.
''We are confident (the offer will succeed). We are offering a full and fair price and it is obvious there is no other bidder,'' Barrick Chief Financial Officer Randall Oliphant told Reuters.
''We think C$5.00 (a share) is more than a full price for what they've got so far,'' Oliphant added.
Barrick initially offered C$4.00 a share, or about C$128 million, for the approximately 32 million Argentina Gold shares it did not already control, but sweetened the bid after several large shareholders lobbied for a better price.
Barrick, which operates the Pascua gold property six kilometers (3.8 miles) from Veladero, is keen to fold the property into its growing operations in the remote Andean mountain range on the Chilean-Argentine border.
Argentina Gold, one of the hottest mining stocks on the small but lively Vancouver Stock Exchange in recent months, quickly rejected both offers as ''inadequate, opportunistic and coercive.''
Instead, it launched an ambitious drilling campaign and began talks with several mining companies in the hope of receiving a more lucrative offer.
Denver-based Newmont Mining Corp. (NYSE:NEM - news), which already owns 2.5 million Argentina Gold shares and has extensive land holdings near Veladero, was considered the likeliest candidate to come up with a ''white knight'' bid.
But the U.S. gold giant apparently swore off a deal after spending about three weeks studying drill results at Veladero.
Argentina Gold has tantalized investors in recent weeks with a flood of drill results indicating the Veladero property could contain much more than the previous estimate of 4.5 million ounces of gold and 119 million ounces of silver.
Argentina Gold President Patricio Jones recently said Veladero could contain 20 million ounces of gold. The company was unavailable for comment on Thursday.
Optimistic drill results sparked significant buying interest on the VSE this week where Argentina Gold shares climbed as high as C$5.85 a share before sliding to C$5.20 a share on Thursday.
Analysts, however, were split as to whether Barrick would receive the 50.1 percent of Argentina Gold shares necessary to control the Vancouver company ahead of Thursday night's deadline.
A report by Canadian brokerage Research Capital Corp. said Newmont's decision to stay on the sidelines and uncertainty surrounding Veladero's ultimate potential made the Barrick offer sorely tempting.
''We strongly believe that unless shareholders sell or tender to Barrick's C$5.00 offer today, they will be holding much cheaper paper next week,'' the report said.
But John Ing, president of Maison Placements Canada Inc., said the loss of Argentina Gold's poison pill was only the latest salvo in a fight he predicted would continue well past Barrick's deadline.
''I think we're still in the early stages,'' said Ing, who added Barrick's sweetened offer was considered a ''low bid.''
Barrick shares rose C$0.25 to C$28.10 a share on Thursday on the Toronto Stock Exchange.
($1=$1.52 Canadian)
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