Barrick and LAC deals tap into new gold rally

Barrick plans to issue three million common shares at $36.75 per share to Gordon Capital, Merrill Lynch Canada, Goldman Sachs Canada and Trilon Securities. The shares will be offered by the syndicate to clients in Canada and Europe.

LAC is making a unit offering at $14 per unit. Each unit is made up of a share and half a warrant. The units are being bought by RBC Dominion Securities and Gordon Capital.

Barrick’s cash will be added to working capital, Belle Mulligan, senior vice-president of investor relations at Barrick said. “It’s good to have cash in the bank,” Rick Cohen, mining analyst with BBN James Capel, told The Northern Miner. “You never know when a deal is going to come up.”

On Oct 17, when gold bullion was just starting to come to life with a $7 gain to $368(US) per oz, Barrick’s share price closed at $28.25 on The Toronto Stock Exchange. LAC traded at $11.13. The new issues are priced near their new highs of $14.50 and $39 for LAC and Barrick respectively.

Cohen added that during the bear market in golds, raising large sums of cash would have been much more difficult.

Both companies plan to file preliminary prospectuses in all provinces of Canada but not in the U.S.

A 7.5 cents dividend, declared on Sept 6 by Barrick, will be extended to shares issued in the offering, the company says. Also, the company’s board of directors have recommended a 2-for-1 share split.

The Barrick and LAC issues are likely just the first of a spate of issues which could follow from other senior gold mining companies wanting to t ap into the financing window recently opened by the rally in golds.

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