Bidding for North American may continue

U.S. gold mining giant Homestake Mining has dug deeper into its pockets and made a follow-up offer for North American Metals.

Although North American’s board of directors favors the new offer, the bidding may not be over. North American is also being courted by one of Murray Pezim’s Prime Group companies.

In its amended offer, Homestake has agreed to raise an earlier bid of $4 per share to $5 which the North American board concludes is “reasonable from a financial point of view.” The amended offer is for all of North American’s common shares but is conditional upon Homestake acquiring a 51% controlling interest.

Major shareholders in North American, including officers and directors of the company, hold an aggregate of 1,003,600 common shares; and they have options to acquire another 659,000 common shares all of which are being deposited under the amended offer.

In rejecting the earlier bid, North American’s board pointed out in a directors’ circular that discussions had taken place between Homestake and Montague Mining Finance which has an option on an undisclosed number of North American treasury shares at $4.50 each.

At the time the directors circular noted: “Although the company has no knowledge whether any offer to purchase those shares was made, the board of directors are of the view that the discussions themselves reflect an acknowledgement by Homestake that the right to purchase such shares is valuable.”

Early last month, Tony Garson, a senior mining analyst at Continental Carlisle Douglas of Vancouver, predicted a follow-up offer by Homestake was possible. And he thought “a price closer to $5 might be fair for the company.”

The next move, if there is one, is up to Pezgold Resource Corp. which has offered to take down two million units of North American at $4.50 each. The units include a share purchase warrant for another two million shares at $4.75 each. Pezim told The Northern Miner that “they (North American Metals) accepted our bid, we have a signed contract with the company, and it’s supposed to go to shareholders. We are looking at our options and they will be hearing from me.

“It’s a long way from being finished,” he added.