news !!!!
Monday January 25, 8:37 pm Eastern Time
Company Press Release
Argentina Gold Recommends Rejection of
Barrick's Amended Offer and Announces Increased
High-Grade Resource at the Amable Target
VANCOUVER, BRITISH COLUMBIA--Argentina Gold Corp. (the ''Company'') announced today
that its Board of Directors unanimously recommended that shareholders reject the amended offer by
BGC Acquisition Inc., a wholly-owned subsidiary of Barrick Gold Corporatio n, to purchase all of the
outstanding common shares of the Company at a price of $5.00 per share. A special committee of
directors of Argentina Gold, independent of management, recommended that the Board urge rejection
of the Barrick offer.
In addition to all of the other conclusions reached by the Board in rejecting Barrick's original $4.00 per
share offer, the Board concluded that:
-- Barrick's amended offer continues to be inadequate, opportunistic and coercive.
-- The enormous potential of the Veladero Project as evidenced by continued excellent drill results is
not reflected in the $5.00 per share offer price
-- As confirmed by an independent report of Watts, Griffis and McOuat Limited, Consulting
Geologists and Engineers (''WGM''), based on the current resource estimate for the Amable target at
the Veladero Project, which does not take into account the excelle nt partial results of Hole 103 or the
spectacular partial results of Hole DDA-1, the Amable resource could be operated independently of
any neighbouring operation
-- In the opinion of Loewen, Ondaatje, McCutcheon Limited (''LOM''), the amended offer continues
to undervalue Argentina Gold shares and is inadequate
-- Despite Barrick's claim that its low-grade Pascua Project in Chile is ''an independent, stand-alone
project'', the high-grade resource present at the Veladero Project is important to Barrick's development
of the Pascua Project and its commercial viabili ty and, as a result, Barrick's offer should reflect a
sharing of the economic synergies with Argentina Gold shareholders which would be obtained by
Barrick through the addition of the Veladero Project to the Pascua Project
''Despite what the market has told Barrick and despite our success to date in establishing the Veladero
Project as a world-class deposit, Barrick still believes that Argentina Gold shareholders will accept a
woefully inadequate price for Argentina Gold'', said William Rand, the chairman of the Special
Committee. ''The Board is resolved to maximizing shareholder value and, given what we have
achieved at the Veladero Project in such a limited period of time and with its blue-sky potential,
Barrick's latest offer isn't even close.''
The special committee obtained an opinion from LOM that the offer continues to undervalue Argentina
Gold shares and is inadequate from a financial point of view to the holders of Argentina Gold shares.
A copy of the LOM opinion is contained in the Notic e of Change to the Directors' Circular of
Argentina Gold dated January 25, 1999 which is being mailed to shareholders.
Since December 30, 1998, the date that the Board rejected Barrick's $4.00 per share offer, continued
drilling at the Veladero Project has enlarged the high-grade section of the Filo Federico target, has
opened up the Filo Federico target to the west, has
identified a new target, known as the Amable North target, located 600 metres north of the Amable
target and has extended the high-grade resource of the Amable target to the east. In particular,
spectacular partial results from Hole DDA-1 returned 31 m
etres of 42.25 grams of gold per tonne and 42.61 grams of silver per tonne including 19 metres of
61.91 grams of gold per tonne and 50.15 grams of silver per tonne.
WGM Preliminary Resource Estimate
In its report dated January 24, 1999, WGM estimated a preliminary resource for the Amable target of
the Veladero Project. Based upon the distribution of gold values, WGM has separated its estimate into
high-grade and low-grade resources, with the expect ation that gold and silver would be recovered
from the higher-grade material using a conventional milling process and from the lower-grade material
by heap leaching. WGM's preliminary estimate is as follows:
Mineral Resources B Amable (as of January 21, 1999, up to and including Hole 102)
Category Tonnes Gold Grade Silver Grade Contained Gold
(millions) (g Au/t) (g Ag/t) (million ounces)
High Grade(+2g Au/t)
Indicated Resources
8.76 5.37(x) 47.88 1.51
Inferred Resources
5.54 4.60(x) 47.88 0.82
Low Grade (1 to 2g Au/t)
Indicated Resources
5.00 1.36 44.02 0.22
Inferred Resources
3.67 1.35 44.02 0.16
Note:
(x)High gold grades cut to reduce influence.
WGM's resource estimate does not take into account the partial results of Holes 103 and DDA-1
announced by Argentina Gold earlier today and does not include the Filo Federico, North-West or
Amable North targets. Based on its resource estimate, WGM concl uded that the Amable deposit
could be operated independently of any neighbouring operation. ''From what some industry observers
have said, I'm not sure the same could be said for Pascua'' noted Mr. Rand.
In WGM's opinion, the Company has been remarkably successful in its use of Controlled Source
Audio Magneto Telluric (''CSAMT'') to define drill targets. WGM indicated in its report that it
believed that the recent intersection of gold and silver mineraliz ation in Hole 100, 600 metres north of
the Amable target is of particular significance. ''Not only does this represent a new discovery, known
as Amable North,'' the WGM report states, ''but it suggests that the targets defined to date are only
part of a mu ch larger gold-bearing system that may contain multiple deposits.'' WGM concluded that
the Company should continue with its current exploration approach and is confident that additional
mineralization will be defined at Veladero to enhance and augment th e current resource base.
The approximately 17 million ounces of identified resources at Barrick's Pascua Project (which, based
on Barrick's 1997 Annual Report, represent almost 25 percent of Barrick's total resources) are
considered to be low-grade sulphide resources as opposed to the high-grade oxide resource present at
the Veladero Project. The carrying value of Barrick's Chilean assets, which the Company understands
to be comprised primarily of the Pascua Project, is US$1.023 billion, based on its 1997 Annual
Report. Barri ck has estimated the development costs associated with the Pascua Project to be
approximately US$950 million. The Board believes that the acquisition by Barrick of control over the
Veladero Project would have a significant impact on the economics of Pas cua. Shareholders of
Argentina Gold should not allow Barrick's shareholders to enjoy the entire benefit of such economic
synergies without requiring Barrick to pay fair value.
As it did in response to Barrick's $4.00 per share offer, the Board has considered the following factors
in reaching its recommendation to reject Barrick's amended offer:
-- The amended offer price represents a discount to the market price of Argentina Gold Shares based
on both the closing price of the shares on January 25, 1999 and the average closing price of the shares
since the date that Barrick announced its intentio n to make its original offer
-- The amended offer is inadequate and fails to recognize the underlying value of Argentina Gold
-- Barrick, by offering $5.50 per share in negotiations with Argentina Gold on December 8, 1998, has,
through its actions, confirmed that the value of Argentina Gold is substantially greater than $5.00 per
share
-- The timing of the offer is opportunistic and coercive and the amended offer is the latest attempt by
Barrick to take advantage of Argentina Gold and its shareholders
-- Adolf H. Lundin, the Chairman and principal shareholder of the Company, and the other directors
and officers of the Company, who hold in the aggregate 15.5 percent of the outstanding shares do not
intend to tender to the amended offer
-- Other offers or alternatives may emerge
The Company is working closely with its financial advisor, ScotiaMcLeod Inc., in actively soliciting
interest from other parties to determine if a superior offer or alternative is available. To date,
information packages including confidentiality agreeme nts have been forwarded by ScotiaMcLeod to
12 potentially interested parties. Several other parties that previously entered into confidentiality
agreements with Argentina Gold, continue to be involved in the process. A number of parties which
have not ye t signed confidentiality agreements have entered into discussions with management of
Argentina Gold to determine their level of interest. In addition, several of the parties have conducted or
are scheduling site visits and/or meetings with management of Argentina Gold.
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 carefully and to reject Barrick's amended
offer and not tender their shares.
ON BEHALF OF THE BOARD
Lukas H. Lundin, Director
Contact:
Argentina Gold Corp.
Sophia Shane
Corporate Development
(604) 689-7842
www.argentinagold.com |
