AG votes in favour of Homestake takeover

Shareholders of Argentina Gold (ARP-V) have voted 99% in favour of an offer by San Francisco-based Homestake Mining (HM-N) to acquire all of the junior’s outstanding shares.

Under the proposed arrangement, AG shareholders will receive 0.545 share of Homestake for each share of AG. Homestake will then issue 21 million additional shares, which works out to about 8.8% of its currently outstanding shares. Final approval by Canadian regulators was expected in late April.

“It’s been a bit of a wild ride at times,” says Lukas Lundin, a director of AG. He adds that he believes the Veladero project in western Argentina — AG’s principal asset — will continue to grow under Homestake’s direction. AG has a 60% interest in Veladero, with the remainder held by Barrick Gold (abx-t).

The indicated and inferred resource at Veladero’s Amable target stands at 27 million tonnes averaging 2.98 grams gold and 46.46 grams silver per tonne (or 2.59 million oz. gold and 40.32 million oz. silver).

At the Filo Federico target, the total indicated and inferred “in-pit” resource is estimated to be 20 million tonnes averaging 3.05 grams gold and 19.12 grams silver (or 1.96 million oz. gold and 12.3 million oz. silver).

AG says the total resource for both Amable and Filo Federico stands at 5.84 million oz. gold and 72.24 million oz. silver contained in 73.19 million tonnes of material.

Homestake’s bid was worth $7.81 per share of AG, based on the March 5 closing price. The deal represents a 56% premium over the $5 bid made by Barrick Gold in January and a 63% premium over the closing sale price of AG shares on the day prior to Homestake’s offer.

“This transaction provides Homestake with a growth profile that fits our goal of increasing the quality of our gold reserves and mineralized material,” says Homestake Chairman Jack Thompson. “Following completion of the transaction, we intend to accelerate the drilling program. Our emphasis in 1999 will be on converting resources to reserves and developing the information necessary to complete a feasibility study.”

In addition to Veladero, Homestake gains ownership of the Del Carmen project, as well as the Rio Frio, Santa Rosa and Vicuna Pampa prospects, all of which are in Argentina. AG’s land package covers more than 80% of the prolific El Indo gold belt in that country.

Barrick will continue to hold a 40% stake in Veladero.