Barrick and Placer exchange jabs

The emerging punch and counter-punch routine between Placer Dome (PDG-T, PDG-N) and Barrick Gold (ABX-T, ABX-N) continued unabated this week.

First came Placer’s Nov. 29 announcement doubling the resources at its Bald Mountain mine in Nevada to 2.8 million oz. gold, and the tripling the inferred resources there to 600,000 oz. gold. Placer says reserves stand at 900,000 oz gold.

Geoff Handley, Placer’s executive vice-president of strategic development admitted the announcement was made sooner than normal as a result of the Barrick bid.

“We felt (the Bald Mountain results) were material enough that our shareholders need to know the potential of this district,” Handley said at the Scotia Capital Precious Metals and Base Metals Conference in Toronto.

Last week Placer said Barrick’s US$9.2 billion offer for the Vancouver-based company did not reflect the true value of its assets.

Also on Nov. 29, Barrick’s president and chief executive Greg Wilkens said in a press release that the Barrick offer was, “full and fair, and nothing that Placer Dome has said in response to our offer was new or unexpected. We see no reason to amend our bid one iota.”

The release reiterated the fact that Barrick’s offer included a 27% premium on Placer’s shares.

Barrick went on the attack in the release, questioning the wisdom of shareholders who would support Placer management’s rejection of the premium when Placer admits the next year or two “would be difficult for Placer Dome.”

Barrick also defended itself against Placer’s claim that its gold production will be on the rise by 2010 while Barrick’s will be on the decline. Barrick challenged the basis of the claim, saying it hasn’t issued any guidance stretching so far into the future. Barrick said Placer made the allegations on the basis of just one analyst’s work.

Barrick’s offer is for US$20.50 for each Placer Dome share with roughly 87% offered in Barrick stock and 13% in cash. The bid includes a side deal with Goldcorp (G-T, GG-N), which would buy Placer’s Canadian assets for US$1.35 billion.

Since Placer management urged its shareholders to reject Barrick’s offer last week, it has opened its data room to other companies.

The Globe and Mail reported on Nov. 30 that Newmont Mining (NMC-T, NEM-N) — considered to be a chief alternative to Barrick in a Placer takeover — tried to secure a non-aggression pact with Barrick.

The deal would have Newmont staying clear of Placer if it secured the right to buy certain Placer mines from Barrick. It is widely rumoured that Newmont is interested in Placer’s three Nevada mines — Bald Mountain, Turquoise Ridge and Cortez. Barrick’s rejection of the pact could push Newmont towards making a rival bid for Placer.

“We are managing this company for the long term,” Handley says, “and we expect that we will be able to stand alone if there is no better offer that comes to the table.”