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Gold/Mining/Energy : ARP - V Argentina Gold -- Ignore unavailable to you. Want to Upgrade?

To: Enigma who wrote (2089)	1/21/1999 9:44:00 PM
From: Eashoa' M'sheekha	Respond to of 3282

=================================================================== A little lesson in Lundin-ology Tuesday, January 19, 1999 Mathew Ingram Calgary -- Has giant Barrick Gold Corp. won the day with its upgraded $5-a-share offer for Vancouver's Argentina Gold Corp.?That will likely become more obvious over the next two weeks as shareholders make their feelings known prior to Barrick's bid expiring on Jan. 29. One thing is for sure: You can always count on plenty of action when the Lundin clan is involved. The family of Geneva-based Swedish financier Adolf Lundin seems to pop up whenever there is an interesting resource play at stake, and they are especially fond of the Vancouver Stock Exchange. For example, although he is just a member of the board, son Lukas Lundin helps control the action at Argentina Gold, of which his family owns 12 per cent. Like Lukas, Mr. Lundin's other son Ian is also more or less based in Vancouver and has played a role in several resource stories -- including the tangled tale of Arakis Energy, the junior oil exploration company based first in Vancouver and then in Calgary and recently taken over by Talisman Energy. At one point, it looked like the Lundins were preparing a takeover bid, with their eye on Arakis's massive crude oil field in Sudan. The family is no stranger to dealing with militaristic regimes such as Sudan. In fact, the Lundins seem more than willing to go where others would rather not -- such as Zaire, where Lundin-controlled Tenke Mining worked out a deal with the then-government of that war-torn country for some of its large copper-cobalt resource. A couple of regimes later, Zaire has now become the equally unstable Democratic Republic of Congo. Barrick Gold and chairman Peter Munk aren't exactly newcomers to the corporate world, and have experience with acquiring promising VSE juniors -- such as Arequipa Resources, which Barrick bought in 1996 -- so we can assume they did their due diligence on Argentina and the Lundins prior to launching a play for the company late last year. But did they know just how tenacious the Lundin family can be? That's difficult to say. In any case, they have since gotten a quick lesson in Lundin-ology. First, Barrick went the friendly route, hoping to convince the family to sign a lock-up agreement for its stock and recommend Barrick's offer to shareholders. In return, Barrick offered $5.50 a share -- which, with the stock then trading at about $2.50, might seem to be too good to refuse. Not for the Lundins. They put out a strongly worded statement detailing Barrick's friendly takeover attempt and said they had refused the lock-up deal, convinced the stock was worth north of $6.25 based on the potential of the company's stake in the Veladero gold property near San Juan, Argentina -- of which Argentina Gold owns about 60 per cent. The owner of the other 40 per cent of the property just happens to be Barrick Gold. When it comes to pushing Barrick to increase its offer, one of the weapons in the Lundin family arsenal has been the knowledge that Mr. Munk and his company would very much like to own the rest of the property, so that it can be managed jointly along with Barrick's Pascua project in nearby Chile, reducing development and infrastructure costs. That interest -- combined with the fact that Barrick had already made it clear that it was willing to pay $5.50 for the stock -- led most industry watchers to the conclusion that Barrick's original $4-a-share offer, which came after the collapse of the friendly talks, was not the end of the story. The shares continued to trade on the assumption that $5 or more was coming at some point, either from Barrick or from another gold company. To keep up the pressure, the Lundins not only introduced a "poison pill" shareholder rights plan last week, but have also carefully managed the flow of information from the drilling program at Veladero to keep Barrick's feet to the flame. Since the original offer in early December, Argentina has twice upgraded the potential value of the deposit on its property. That's not to say everything has gone the Lundins' way, by any means. By all accounts, the family was initially hoping to start a bidding war for the Veladero property between Barrick and Newmont Mining -- which took a 7.2-per-cent ownership stake in Argentina by way of a private placement in October. But Newmont has so far remained on the sidelines. A bidding war between two majors has paid off for the Lundins in the past -- it was the key to the $15-a-share they got for International Musto Explorations when Rio Algom and North Ltd. bought it in 1995, beating out Placer Dome's $12.50. Another Lundin play, International Curator Resources, hasn't been as lucky -- no one has snapped up its Boleo property in Mexico, and the stock has plummeted to 30 cents from more than $5 in 1997. Even if this is the end of the road for Argentina Gold, and Barrick wins the battle with $5 a share, the Lundins will arguably have won. Sure, they may wind up with less than the $5.50 they could have had if they had played ball with Barrick from the beginning. But they've got a whole pile more than the 40 cents a share it was trading at as recently as September, and have added to their reputation as tough negotiators as well. Business West readers can reach Mathew Ingram by fax at (403) 244-9809 or by E-mail at mingram@globeandmail.ca