Getty tells shareholders not to act on Total ofer

Following an evaluation by Wood Gundy Inc., Getty Resources is advising its shareholders not to tender their shares to Total Resources (Canada). Total has made an offer to buy all the issued and outstanding shares of Getty for $10 per share on Jan 11. “In the board’s opinion, shareholders should take no action to tender into the offer, pending further advice from the board,” Richard C. Atkinson, president of Getty, said.

The Getty reaction to the Total takeover bid was based on a report from Wood Gundy, Getty’s financial advisor, that the Total offer of $10 per share was considered too low. In an additional move, Getty has instructed Wood Gundy to find another buyer who would be willing to pay a higher price for the company. To date, “representatives of seven companies have visited the company’s facilities,” Atkinson says. “We’re hopeful for a counter offer,” he added.

Total, which is an affiliate of Total Compagnie Francaise des Petroles of France, is making the offer as part of a long-term corporate strategy to build gold reserves in North America. “It fits perfectly with the Total strategy in North America,” Kristian Ross, executive vice president of Total Erickson Resources, told The Northern Miner. Total Erickson, no stranger to Canadian mining, is a 55%-controlled Total affiliate engaged in gold production at the Mount Skukum mine in the Yukon and at the Erickson mine in B.C.

Getty’s prized asset, which represents a significant gold reserve base, is a 49% interest in the Tundra gold deposit in the N.W.T. Hosting undiluted possible reserves of 26.4 million tons grading 0.18 oz gold per ton, the project is still at least five years away from production. Noranda Exploration holds the remaining 51% interest.

Realizing that the main asset is still an exploration play, Total executive vice-president Jean-Pierre Januard defends the $10 offer price. “It’s an extremely reasonable price,” he explained to The Northern Miner. The Tundra project “is long term and there are many risks involved with this.”

Commenting on the offer, Janu- ard emphasized that “it’s cash, immediate payment with no strings attached. You think twice before rejecting that.”