Australia’s Western buys TSE’s Western

An Australian company, Western Mining Corp., has made a $101-million takeover offer for Toronto-based Western Goldfields whose principal asset is the Hog Ranch mine in Nevada.

In the past month Western Mining, Australia’s largest gold producer, has announced plans to acquire Northgate Explorations’ wholly-owned subsidiary, Northgate Mines, whose operations (copper- gold) are located in Quebec’s Chibougamau area. Seabright Resources of Halifax and its main asset, the Beaver Dam gold project in Nova Scotia, are also on Western Mining’s shopping list as is Vancouver- based Grandview Resources, owner of the Carson Hill gold mine in California. When the company steps up to the checkout counter it will have to shell out almost $500 million for the purchases which, incidentally, represents less than half of its $1.3-billion war chest.

Western Mining appears more than willing to pay a premium for these assets including Western Goldfields which just two weeks ago was trading below $8 on the Toronto Stock Exchange. The tender offer is at $11.25 per share for the roughly nine million shares outstanding, said Western Goldfields Chairman Robert Buchan in a telephone interview from Toronto.

Buchan said that he and a number of other directors have put their stock “in a lockup” so Western Mining has 40% of the company tied up already. “I would be very surprised if they didn’t achieve their goal of control,” he added. The largest shareholders in Western Goldfields are Sedimex, a German drilling fund, and dcc Equities, the resource merchant banking arm of Dynamic Capital, a publicly traded company.

Imperial Metals Corp. has a piece of Western Goldfields which its chairman, Hugh Morris, said “will look nice on our financial statements.” One of Imperial’s partnerships holds almost 1.2 million shares. “By the time the smoke clears this will be worth over three- quarters of a million to Imperial Metals,” he conceded.

Western Goldfields has a 65% interest in the Hog Ranch project in Nevada which last year produced 45,400 oz gold and is expected to generate another 60,000 oz in 1988. Exploration there has been restricted by “the limited resources of the company,” Buchan admitted, noting that work has been confined to filling in existing orebodies.

Dcc Eqities will buy Western Goldfield’s 18.4% interest in Delaware Resources Corp. for $13 million, probably because Western Mining is not interested in minority positions in joint ventures. Delaware is involved in a major gold discovery with Cominco in northwestern British Columbia. The purchase of the Delaware interest works out to $8.25 per share.

“From my experience Western Mining has dealt more than openly and honestly with us and they are a delight to do business with,” Buchan said.