Vancouver — Barrick Gold (ABX-T, ABX-N) has increased and extended its takeover bid for NovaGold Resources (ng-t, ng-x), now offering US$16.00 per share until Nov. 7.
Tabled as its “best and final offer,” the all-cash bid represents a more than 10% boost from its July 24th offer of US$14.50 per share. But NovaGold still found the sweetened bid unpalatable, again advising its shareholders to reject the hostile bid.
The increase comes despite Barrick chairman Peter Munk’s previous statements that the company would “absolutely not” have to raise its offer for NovaGold. Barrick has disclosed that just 167,679 shares (0.18% of the total outstanding) have been tendered to its original offer. The conditions of the bid remain the same, including the requirement that at least 50.1% of NovaGold shares be tendered. The offer values NovaGold at about US$1.7 billion.
“We are confident that we have arrived at a price which strikes a balance between NovaGold shareholder expectations of value and a price that is acceptable to Barrick,” said Barrick president and CEO Greg Wilkins in a statement.
After review, NovaGold rebuffed the sweetened offer, saying it still fails to reflect the value of its 70% interest in the Donlin Creek gold project in Alaska, plus its other projects (particularly Galore Creek in B.C. and Rock Creek in Alaska). The company also argues Barrick is unlikely to meet back-in requirements — including spending of US$32 million, completion of a bankable feasibility study and a decision to start mine construction by Nov. 12, 2007 — to earn an additional 40% in the large western Alaskan gold deposit.
“The board and significant NovaGold shareholders believe Barrick’s ‘best and final offer’ is simply not good enough,” said NovaGold president and CEO Rick Van Nieuwenhuyse in a statement. “The message to Barrick is simple, clear and consistent: either offer NovaGold shareholders full and fair value for their investment, or withdraw the offer so NovaGold can get on with its business of advancing projects toward production and creating value for shareholders.”
Following NovaGold’s rebuff, Wilkins urged its shareholders to consider the Barrick offer as “money in the bank.”
“The choice is cash in the bank versus significant project risk and financial dilution,” Wilkins said. “Barrick’s offer eliminates the significant financing, development, operating, construction and commodity price risks for NovaGold shareholders. NovaGold shareholders will experience significant dilution in financing of the US$2.5-billion plus required to construct the Donlin Creek and Galore Creek projects.”
NovaGold shares got a modest boost on the revised bid, closing up 64 at $17.67 apiece in TSX trading and up US58 at US$15.65 on the AMEX, but now trade below Barrick’s offer price.
On a related front, Barrick also recently extended its $1.00-per-share bid for Pioneer Metals (PSM-T, PNMTF-O) until Nov. 9th. The major has acquired about 58.6 million shares of Pioneer, representing about 90.6% of shares outstanding.
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