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Gold/Mining/Energy : ARP - V Argentina Gold
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To: Gord Bolton who wrote (2769)2/16/1999 7:34:00 PM
From: Enigma  Read Replies (1) of 3282
 
Gord - it seems to me that Lundin has been talking a good game for some time - 20 million oz unlikely after a few more drill holes.

It appears that we have seen miscalculations here on both sides. First I do think that Barrick thought the initial offer of $4 was fair, based on what was known. They were prepared to offer $5.50 for a lock. I think it was probably greed on the Lundin's part and ego/pride that made them refuse - greed because they failed to realise the extent to which Barrcik is in play in this deal (and still is). When the Lundin's leaked the $5.50 offer I think they thought that this would establish a floor price for the stock - instead it became a virtual ceiling. Maybe Barrick should have immediately pulled their offfer at this point - rather than reverting to the meaningless $4 offer..

In then selling his shares and using the proceeds to buy the pp Lundin diluted the stock unnecessarily - because there is no way they can spend $10 million on drilling in the 2 1/2 months to the end of the drilling season - maybe $2/$5 million would have sufficed.

So Barrick's strategy must now be to wait out the Lundins - wait till after the drilling season is over - if more reserves are actually proved up then they will feel more secure in their eventual bid. It is highly unlikely that anyone else will make a counter offer.

dd
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