In response, AG stands firm in its recommendation that its shareholders not tender to Barrick’s bid.
Barrick is manoeuvring to acquire AG’s chief asset, the Veladero gold-silver property in northwestern Argentina. Situated near the Chilean border, 390 km northwest of San Juan, the project is currently a 60-40 joint venture between AG and the major, with the former acting as operator.
“We think the potential for the property is enormous,” says Lukas Lundin, a director of AG. “We are therefore rejecting the Barrick bid very strongly and we expect to be able to create much more shareholder value in the very near future.”
He went on to say that AG has signed confidentiality agreements with numerous other mining companies but would not elaborate any further.
Barrick’s final offer remains conditional on acquiring at least 50.1% of AG’s shares on a fully diluted basis, including the 9.9% of the outstanding shares already owned by Barrick.
Some of the junior’s larger shareholders include TD Asset Management, which holds about 10.8% of AG, and Denver-based
In addition to the extension, the British Columbia Securities Commission has dissolved the shareholders’ rights protection plan, adopted by the junior to prevent a hostile takeover bid by Barrick. The major argued that the plan had been introduced too late in the takeover bid process and that it would actually interfere with the right of AG shareholders to decide for themselves if the bid was adequate.
AG’s board of directors implemented the plan following Barrick’s first takeover bid of $4 per share. The plan was designed to provide AG with enough time to consider all alternatives to the takeover bid, as well as to solicit better offers for its shareholders.
“We are extremely pleased by the decision of the B.C. securities regulators to allow the shareholders of AG to make their own decision,” said Barrick President Paul Melnuk. “It was obviously time for the poison pill to go. Fifty days have passed since the announcement of our offer and there have not been any competing bids. None have materialized.”
AG’s president, J.P. Jones, feels differently. “They [the securities regulators] are preventing us from exploring something that has five to six million ounces, and if you take equivalent silver at this moment we have around eight million ounces. They are preventing us from exploring and proving that the blue sky potential is much higher. To me it is unbelievable, and below contempt.”
Meanwhile, AG has released complete results from its first diamond drill hole at the Amable target at Veladero. Hole DDA-1 intersected 169 metres averaging 12.5 grams gold and 67.82 grams silver per tonne, starting at a down-hole depth of 65 metres. Included in this intercept was a 59-metre interval that assayed 30.27 grams gold and 80.71 grams silver, starting at a down-hole depth of 76 metres. A 25-metre high-grade section in this interval averaged 52.5 grams gold and 49.64 grams silver, starting at 81 metres down-hole.
The drill was collared on the same platform as previously reported hole 90 (255 metres averaging 6.15 grams gold and 24.5 grams silver) and was designed to test the high-grade section intercepted by previously reported holes 90, 80 and 85, which were drilled by a reverse-circulation rig.
A second diamond drill hole is currently testing the high-grade section from the west. The new hole, DDA-2, has reached a depth of 70 metres and was collared about 15 metres north of hole 89. It is drilling eastwards at an angle of minus 75 degrees.
Results from hole 107, drilled at the western Filo Federico target, returned 74 metres averaging 2.04 grams gold and 18.12 grams silver, starting at a down-hole depth of 51 metres. Included in this intersection was a 24-metre interval that ran 3.82 grams gold and 26.62 grams silver. The hole was collared 50 metres southwest of previously reported hole 98 (145 metres grading 1.06 grams gold and 13.05 grams silver).
This hole expands the high-grade section (above 3 grams gold) of the western Filo Federico target towards the resource found at the NW target.
At the Amable target, hole 106 revealed only discontinuous mineralization up to 1.5 grams gold per tonne. The hole was collared 60 metres southeast of hole 103 (204 metres averaging 2.78 grams gold and 22.37 grams silver).
Reverse-circulation continues at the southeastern extension of the Amable target, as well as at the western extension of the Filo Federico target and the newly discovered Amable North zone. Holes 108, 109, and 110 have been completed and assays are pending.
At Amable, hole 108 was collared 10 metres east of hole 80 (212 metres averaging 3.67 grams gold and 47.71 grams silver) and was drilled vertically to test the potential continuity of high-grade zones at depth. Hole 110 was collared 45 metres east of hole 92 (105 metre averaging 7.67 grams gold and 52.5 grams silver) and was drilled due west.
At Filo Federico, hole 109 was collared 50 metres southwest of hole 72 (drilled the previous season).
Hole 111 is spinning 50 metres east of hole 100 (91 metres averaging 1.15 grams gold and 11.7 grams silver) at the Amable North target and has reached a depth of 342 metres.
Hole 112, at Filo Federico, was collared on the same platform as hole 58 (drilled last season) and is being drilled in a southerly direction.
Hole 113, at Amable, was collared 50 metres west of hole 92 and is in progress.
Currently, three reverse-circulation drills are on site: one at Filo Federico, one at Amable, and one at Amable North. One diamond drill rig is spinning on the Amable target and another is being mobilized for the Filo Federico target.
AG has arranged a private placement financing consisting of 2 million shares priced at $5.25 per share. Proceeds are expected to total $10.5 million, and will be used partly to fund ongoing drilling.
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