Here is the rest of the story regarding Argentina Gold:
Thursday December 31, 9:21 am Eastern Time
Company Press Release
RETRANSMISSION: Argentina Gold Recommends
Rejection of Barrick Offer and Announces
Preliminary Resource Estimate on Amable Target at the Veladero Project
VANCOUVER, BRITISH COLUMBIA--Argentina Gold Corp. (ARP-V.S.E.) announced today that its Board of Directors
unanimously recommended that shareholders reject the offer by BGC Acquisition Inc., a wholly-owned subsidiary of Barrick
Gold Corporation [NYSE:ABX - news], to purch ase all of the outstanding common shares of the Company at a price of
$4.00 per share. A special committee of directors of Argentina Gold, independent of management, recommended that the
Board urge rejection of the Barrick offer.
In making its recommendation, the Board concluded that:
- The Barrick offer is inadequate, opportunistic and coercive
- In the opinion of LOM, the offer significantly undervalues Argentina Gold shares and is inadequate
- The market clearly recognizes that the Barrick offer is inadequate
- Barrick has rushed its offer in an attempt to acquire 100 percent of the Veladero Project before further exploration results are
announced
- The Barrick offer is inadequate and fails to give recognition to the underlying fundamental value of Argentina Gold and its very
prospective exploration properties
- Barrick has confirmed that the value of Argentina Gold is substantially greater than its offer
- Barrick's offer is its latest coercive attempt to obtain control of the Veladero Project without paying fair value
The special committee obtained an opinion from Loewen, Ondaatje, McCutcheon Limited (''LOM'') that the offer significantly
undervalues Argentina Gold shares and is inadequate from a financial point of view to the holders of Argentina Gold shares. A
copy o f the LOM opinion is contained in the Notice of Change to the Directors' Circular of Argentina Gold dated December
30, 1998 which is being mailed to shareholders.
''The Board has clearly determined that the Barrick offer is inadequate, opportunistic, coercive and not in the best interests of
the Company and all of its shareholders'' said William Rand, the chairman of the Special Committee. ''The market clearly recog
nizes that the Barrick offer is inadequate.'' The closing price of the shares on the VSE yesterday, December 29, 1998, was
$5.15, and the shares have traded as high as $5.75 since the offer was announced, with the offer representing a 44 percent
discount
to that price.
''One would have thought that a company of the stature and sophistication of Barrick would have been prepared to offer to
purchase Argentina Gold shares from all of the public shareholders at a price of at least $5.50 per share being the price which
Barri ck had privately indicated to insiders of Argentina Gold that it was prepared to pay'' added Mr. Rand. ''In view of the
fact that in excess of 14 million shares of Argentina Gold have traded over the past 14 trading days with an average closing
price of $5 .33 and a high price of $5.75, an offer of $4.00 per share is not only inadequate, it is insulting and a waste of
everyone's time''.
Preliminary results of the 1998/99 exploration program at the Veladero Project have been excellent, with corresponding
increases in Argentina Gold's share price as results have been announced. Barrick, who is the joint venture partner at Veladero
and ha s access to all non-public information in respect of the Project, has rushed its offer to try and acquire 100 percent of the
Project before further exploration results are announced and reflected in the market. Barrick's coercive and opportunistic offer
is clearly an attempt to do this without paying fair value to Argentina Gold and its shareholders.
Argentina Gold also announced today a preliminary inferred resource estimate for the Amable target at the Veladero Project
dated December 29, 1998 by Dr. James W. Stewart, P.Geo. of 31.8 million tonnes with an average grade of 2.02 grams of
gold per tonn e and 43.1 grams of silver per tonne for 2.06 million ounces of gold and 43.9 million ounces of silver. This
resource includes 50 metre by 50 metre high grade blocks that aggregate 900,000 tonnes with an average grade of 17.36
grams of gold per tonne an d 71.7 grams of silver per tonne for 502,468 contained ounces of gold and 2,076,806 contained
ounces of silver. The resource estimate does not take into account the results of Hole 96 released by Argentina Gold today
which returned 202 metres of 2.61 gr ams of gold per tonne and 21.43 grams of silver per tonne including 107 metres of 3.95
grams of gold per tonne and 28.45 grams of silver per tonne. More importantly, Hole 96 confirmed that the Amable target is
open to the southeast of the resource.
When combined with the previously announced resource estimate at the Filo Federico target, Argentina Gold has reported
preliminary resource estimates of 4.46 million ounces of gold and 118.9 million ounces of silver at the Veladero Project.
The Barrick offer is inadequate and fails to give recognition to the underlying fundamental value of Argentina Gold. Argentina
Gold is the largest holder of exploration properties in a very prospective border area of Argentina along the Chilean border,
part of the El Indio gold belt. Argentina Gold holds a dominating position along the Andean crest of Argentina, comparable to
that held by Barrick across the border in Chile. The northern Veladero area considered together with the nearby Pascua
deposit in Chile is potentially a major new gold district in the making. To date, with minimal drilling, Argentina Gold has had a
highly successful exploration program at the Veladero Project and the Project has substantial further exploration potential which
m anagement believes can only be realized through continued drilling. By accepting Barrick's offer, Argentina Gold's
shareholders will not have the opportunity to realize the exploration potential of Argentina Gold's dominant exploration position
in this highly prospective area.
Barrick has also confirmed that the offer undervalues Argentina Gold by indicating it was prepared to offer $5.50 per share in
order to obtain the support of Argentina Gold and certain of its shareholders. Barrick has thereby confirmed that the value o f
Argentina Gold is substantially greater than the $4.00 per share offer.
The offer is Barrick's latest coercive attempt to obtain control over the Veladero Project without offering to pay to Argentina
Gold and its shareholders the fair value of the Project. The offer is at a price substantially below the price that Barrick h ad
previously offered to pay during negotiations with Argentina Gold, has been made over the Christmas and New Year's holiday
period, when Barrick knows it will be difficult for other potential bidders to react, and clearly disregards the interests of Ar
gentina Gold shareholders. The acceptance period is also limited to the minimum amount of time required by law, which is an
insufficient period of time to conduct a proper auction even in the absence of the holiday period, and the result is that shareho
lders of Argentina Gold could be deprived of a potentially better offer.
The Company is actively soliciting interest from other parties to determine if a superior offer or alternative is available. Certain
of these parties have entered into confidentiality agreements and are presently conducting due diligence and the Company
hopes that they will be in a position to complete their due diligence and make proposals to the Company before the expiry of
the offer.
A summary of the reasons for the recommendation is attached hereto as Appendix ''A''. The Board urges shareholders to read
the Notice of Change to the Directors' Circular and the detailed reasons for the Board's recommendation to reject the offer
carefull y and to reject Barrick's offer and not tender their shares.
ON BEHALF OF THE BOARD
J. Patricio Jones, President
APPENDIX ''A''
REASONS FOR THE RECOMMENDATION
The following is a detailed summary of the reasons for the recommendation of the Board of Directors of Argentina Gold to
reject the Barrick offer (the ''Offer''). Shareholders are urged to read the Notice of Change to the Directors' Circular in its
entire ty and not to tender their shares to the Offer. In unanimously concluding the Offer is inadequate and not in the best
interests of Argentina Gold and its shareholders, the Board of Directors gave careful consideration to a number of factors,
including t he following:
Market Price and Trading Volume of the Shares
The closing price of the shares on the VSE on December 29, 1998 was $5.15. The Offer price of $4.00 represents a 29
percent discount to that price. From the date that Barrick announced its intention to make the Offer to December 29, 1998 a
total of 14,3 08,944 shares have traded on the VSE at an average closing price of $5.33 and a high price of $5.75. The Offer
price of $4.00 per share represents a 44 percent discount to that high price.
Inadequacy Opinion of Loewen, Ondaatje, McCutcheon Limited
The Board of Directors has received a written opinion dated December 30, 1998, from Loewen, Ondaatje, McCutcheon
Limited (''LOM'') stating that, in its opinion, the consideration offered to the holders of the Shares pursuant to the Offer
significantly unde rvalues Argentina Gold Shares and is inadequate from a financial point of view. A copy of LOM's opinion is
attached as Schedule ''A'' to the Notice of Change to the Directors' Circular.
Offer Inadequate and Fails to Recognize Underlying Value of Argentina Gold
The Offer is inadequate and fails to give recognition to the underlying fundamental value of Argentina Gold. Argentina Gold has
a vast package of exploration properties located in the Andes of Argentina along the Chilean border. Argentina Gold holds in
excess of 560,000 hectares of land within this area which includes the Veladero Project (on which the Amable and Filo
Federico targets have been identified to date), the Del Carmen Project, the Rio Frio Project and the Pancho Arias (Santa
Rosa) Project.
Veladero Project
The Veladero Project is owned by the Veladero Joint Venture, a joint venture owned as to 60 percent by Argentina Gold and
as to 40 percent by Barrick, with Argentina Gold as operator. Prior to 1998, exploration of the Veladero Project and, in
particular , drilling on the Filo Federico target had resulted in a resource estimate of 2.4 million ounces of gold and 75 million
ounces of silver with only a fraction of the area of the Veladero Project having been explored. One additional hole has been
drilled adjacent to the Filo Federico target during the 1998/99 exploration season, being Hole 91, which indicates that the
target opens up to a large sector to the east of the established resource. The balance of Argentina Gold's exploration program
for the 199 8/99 season at the Veladero Project has, to date, concentrated on the Amable target where excellent drilling results
have established a significant gold/silver resource including a well defined high grade zone.
A report entitled ''Preliminary Report on the Veladero Project'' dated December 29, 1998 by Dr. James W. Stewart, P.Geo.,
contained a preliminary inferred resource estimate for the Amable target at the Veladero Project of 31.8 million tonnes with an
averag e grade of 2.02 grams of gold per tonne and 43.1 grams of silver per tonne for 2.06 million ounces of gold and 43.9
million ounces of silver. This resource includes 900,000 tonnes of high grade material at an average grade of 17.36 grams of
gold per ton ne and 71.7 grams of silver per tonne for 502,468 contained ounces of gold and 2,076,806 contained ounces of
silver. The high grade tonnage represents a number of individual high grade drill intercepts, to each of which is assigned a 50
metre by 50 metre
area of influence. The resource estimate does not take into account the results of Hole 96 released by Argentina Gold on
December 30, 1998 which returned 202 metres of 2.61 grams of gold per tonne and 21.43 grams of silver per tonne including
107 metres
of 3.95 grams of gold per tonne and 28.45 grams of silver per tonne. More importantly, Hole 96 confirmed that the Amable
target is open to the southeast of the resource. The report concluded as follows:
- The northern Veladero area has high exploration potential. Only a small part has been explored to date. Considered together
with the nearby Pascua deposit (in Chile), what we see may be a major new gold district in the making.
- The Filo Federico and Amable Targets are early examples of the kind of mineralization to be found in such a setting. Both
targets remain open in one or more directions and a great area of adjoining highly prospective ground has not yet had a drill ho
le.
- The ''ordinary'' average grade at Amable (approximately 1.5 grams of gold per tonne and 41 grams of silver per tonne)
already puts the resource in a superior category. Adding in the high-grade has the potential to take this average grade to 2.0
grams o f gold per tonne - or even to 3.0 grams of gold per tonne.
- There is an exciting possibility that the Amable Target represents a novel type of gold deposit. The high-grade gold intercepts
are of a distinctive and unusual kind.
- The silver content of Amable and Filo Federico, although of moderate grade, is very regularly distributed and adds up to an
impressive number of ounces.
- Argentina Gold holds a dominating position along the Andean crest of Argentina, comparable to that held by Barrick across
the border in Chile.
- Over several years Argentina Gold has built up a very efficient, highly motivated team of geologists and technicians. This
represents an important company asset.
The exploration potential of the Veladero Project is enhanced by Argentina Gold's understanding of the resistivities in the
geology of this region. Argentina Gold has utilized Controlled Source Audio Frequency Magneto Telluric Survey (''CSMAT'')
to allow t hree dimensional investigation of rock resistivity as an aid in identifying drillable targets on the Veladero Project. High
resistors (50,000 ohms/m to 110,000 ohms/m) were the first types of rocks in which gold/silver mineralization was found at the
NW Target and Filo Federico Target and influenced Argentina Gold's initial model for the entire Veladero Project. However at
some sectors of the Amable Target, Argentina Gold discovered that rocks carried higher grade gold-silver mineralization even
though the existence of other alteration minerals mixed with silica, such as clays (alunite) in different proportions, reflected
resistivities in much lower ranges, from 3,000 ohms/m to 40,000 ohms/m depending on the amount of silica. Therefore a much
broader p erspective is now available to Argentina Gold when selecting new drill targets and in extending mineralized zones at
known targets. This will also assist Argentina Gold in its future exploration of the Del Carmen Project.
Rio Frio, Del Carmen and Pancho Arias (Santa Rosa) Projects
Argentina Gold holds a 100 percent interest and is the operator of the Del Carmen Project. The Del Carmen Project
encompasses 10,300 hectares and is located at the southern end of the Valle Del Cura volcanic region in the El Indio gold belt.
Geophysica l, geochemical and drilling test work during the 1997/1998 and previous seasons have indicated a favourable
environment for large scale hydrothermal gold systems. A 3,500 metre, eight hole drilling program was completed at the Del
Carmen Project during the 1997/1998 season. The drilling was conducted within a zone of silicified breccia referred to as the
Cerro Amarillo target. Best results were from Hole 27 which returned a 35 metre interval of 1.2 grams of gold per tonne and
33.4 grams of silver per
tonne.
The Rio Frio Project, which is 100 percent owned by Argentina Gold, covers more than 65,000 hectares and hosts seven main
epithermal alteration targets with strong gold anomalies. The large geochemical and geophysical anomalies found at Rio Frio are
con tinuous from Argentina into the Tambo Mine zone in Chile. During the 1997/1998 season, 3,100 metres of drilling in 14
holes were completed. The results were geologically promising.
Argentina Gold owns a 100 percent interest in the Pancho Arias (Santa Rosa) Project with Mansfield Minerals Inc. having the
right to earn a 50 percent interest in the Project. The Pancho Arias (Santa Rosa) Project encompasses 2,140 hectares. The
Projec t is a typical porphyry copper/gold prospect with wide spread alteration. True physical anomalies surround the porphyry
core, grading into the west to argillic alteration in host sequences.
As noted above, Argentina Gold recently announced a preliminary resource estimate for the Amable target. When combined
with the previously announced resource estimate at the Filo Federico target, Argentina Gold has reported preliminary resource
estimates
of 4.46 million ounces of gold and 118.9 million ounces of silver at the Veladero Project.
By tendering to the Offer, which management has concluded is inadequate, and which is made in the very early stages of an
exploration program on the Veladero Project that has established excellent results to date and which will include extensive
drilling
through April/May 1999, Argentina Gold shareholders would not have the opportunity to realize on that exploration potential of
the Veladero Project or on the exploration potential of the vast portfolio of other exploration properties Argentina Gold hold
s in this highly prospective area.
Barrick has Confirmed that the Offer Undervalues Argentina Gold
In negotiations which took place on December 8, 1998 between representatives of Barrick and representatives of Argentina
Gold, Barrick initially indicated that it was prepared to offer to purchase all of the Shares for $5.50 in cash per Share in order
to
obtain the support of Argentina Gold for such an offer. By so doing, Barrick, which is the joint venture partner of Argentina
Gold in respect of the Veladero Project and has access to all non-public information in respect of the Project, has, through i
ts actions, confirmed that the value of Argentina Gold is substantially greater than $4.00 per Share. In that respect, the
December 23, 1998 edition of The Globe and Mail reported as follows: ''Barrick Gold Corp. says that instead of its
$4-a-share host ile takeover bid for Argentina Gold Corp., it would have paid $5.50 if the family of chairman Adolf Lundin had
supported its offer. See ''Background to the Offer''.
Another Major Mining Company Recognizes the Potential of Argentina Gold
Following the announcement by Argentina Gold on October 15, 1998, of the results of Hole 80 drilled on the Amable target at
the Veladero Project, which returned 212 meters of 3.67 grams of gold per tonne, Newmont Gold Company (''Newmont''),
on October 19, 1998, reached agreement with Argentina Gold on a private placement which resulted in Newmont acquiring
2,550,000 Shares of Argentina Gold at $1.96 per Share representing a 23 percent premium over the previous trading day's
closing price of the shares. T he agreement with Newmont was reached on October 19, 1998 and was announced by
Argentina Gold prior to the market opening on October 20, 1998 not on October 28, 1998 as was implied by Barrick in the
Offering Circular. Newmont is the largest gold producer
in North America and the second largest in the world. The purchase of a significant equity position in Argentina Gold by the
world's second largest gold producer, at a substantial premium to the then market price, evidenced Newmont's strong belief in t
he exploration potential of Argentina Gold's exploration properties, including the Veladero Project. Since completion of the
private placement with Newmont, Argentina Gold has announced excellent exploration results on the Amable target at the
Veladero Project.
The Timing of the Offer is Opportunistic and Coercive
The Offer has been made at a time when precious metal prices and the overall market for mineral exploration company stocks
are depressed. In spite of these factors, the trading price of the Shares has increased by approximately 950 percent since
Septemb er 1998 during the 1998-99 exploration season at the Veladero Project. Holders of Shares will be deprived of the
benefit of the underlying value of Argentina Gold to be realized in a good market for mineral exploration company stocks by
tendering to the
Offer. In addition, the Offer was mailed such that the acceptance period occurs over the Christmas and New Year's holidays
which renders it difficult for Argentina Gold shareholders to have sufficient time to properly consider the Offer and for other p
otential interested parties to submit competing offers during the acceptance period. The acceptance period is also limited to the
minimum amount of time required by applicable law, which has been identified as an insufficient period of time to conduct a
proper auction even in the absence of the holiday period. The timing of the Offer is both opportunistic and coercive and could
result in Argentina Gold shareholders being deprived of a better offer.
Barrick's Opportunistic and Coercive Offer is Latest Attempt by Barrick to take advantage of Argentina Gold
Barrick has attempted over the last six months to obtain control over the Veladero Project without offering to pay to Argentina
Gold and its shareholders the fair value of the Project. Notwithstanding Barrick's considerable experience in exploration in t he
vicinity of the Veladero Project and its experience at its Pascua Project, and the fact it is Argentina Gold's joint venture partner
at the Veladero Project, it has provided little, if any, assistance to Argentina Gold in developing exploration progra ms or
assisting Argentina Gold with its understanding of the complex geology of the area.
- In July 1998, Barrick attempted to take operatorship of the Veladero Project away from Argentina Gold by unjustly claiming
that Argentina Gold has forfeited its rights to operatorship under the joint venture agreement relating to the Project. The cla im
was successfully defeated by Argentina Gold.
- During the months of August, September and October of 1998, Barrick attempted to negotiate a takeover of Argentina Gold
while the trading price of the Shares was near its 52 week low.
- While Barrick was not prepared to complete a private placement with Argentina Gold when Argentina Gold required funding
to satisfy its share of the exploration budget for the 1998/98 exploration season of the Veladero Project, the day after
Argentina Gold announced excellent results on the Amable target at the Veladero Project, Barrick approached Argentina Gold
and stated that it was now prepared to complete a private placement at the then market price of the Shares.
- Newmont completed the private placement within 72 hours of Barrick's offer at a 23 percent premium to the price that
Barrick was prepared to pay. Barrick's reaction to the Newmont private placement was to immediately acquire, through
market purchases , 2,105,700 Shares representing 5.9 percent of the outstanding Shares. Barrick subsequently made
additional purchases to increase its Share position in Argentina Gold to 9.9 percent of the outstanding Shares. When Argentina
Gold retained Newmont as a c onsultant to the Veladero Project concurrently with the completion of the private placement,
Barrick's reaction was to issue a letter to Argentina Gold containing unreasonable demands by Barrick relating to the provision
of information regarding the Vela dero Project which was required to be provided by Argentina Gold to Newmont in order to
allow Newmont to discharge its duties as consultant.
- Barrick strategically made the Offer, at a price substantially below the price that Barrick had previously offered to pay during
negotiations with Argentina Gold, over the Christmas and New Year's holidays period during which Barrick knows that Argent
ina Gold shareholders will have limited time to properly consider the Offer and during which it will be difficult for other potential
bidders to react.
The timing and pricing of the Offer is yet another attempt by Barrick to acquire control of the Veladero Project without offering
to pay fair value to Argentina Gold and its shareholders.
Adolf H. Lundin and Other Directors and officers Not to Tender Shares
Neither Mr. Adolf H. Lundin, the Chairman and principal shareholder of Argentina Gold nor any of the other director and
officers of Argentina Gold, who hold in the aggregate 5,539,297 Shares representing 15.5 percent of the outstanding Shares
intend to t ender their Shares to the Offer.
The Offering Circular Contains Disclosure and Procedural Deficiencies
There are numerous disclosure and procedural deficiencies in the Offering Circular which may prevent a holder of Shares from
being able to make an informed decision concerning the Offer or which may adversely affect the financial consequences to a
holder
of Shares who tenders Shares to the Offer. See "Deficiencies in the Offering Circular" in the Notice of Change to the Directors'
Circular.
Other Offers or Alternatives May Emerge
While Barrick has been intimately involved with the Veladero Project as joint venture partner of Argentina Gold and has had
open and complete access to all non-public information regarding the Veladero Project, other potential bidders have not had
the be nefit of such information. It is Argentina Gold's intention to make such information available to other parties. The Board
of Directors, recognizing its duty to seek to maximize shareholder value, on December 8, 1998, announced it is soliciting interes
t from other parties to determine if a superior offer or alternative is available.
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