Barrick nears the summit

Barrick Gold‘s (ABX-T, ABX-N) quest to become the world’s biggest gold miner is nearer fruition after the acquisition of an 81% stake in rival Placer Dome (PDG-T, PDG-N).

Barrick said that as of Jan. 19 some 358 million Placer shares had been tendered to its offer. The shares represent 81% of the Placers common shares (78% on a fully diluted basis). Barrick plans to pay for the shares by Jan. 23.

Payment for the shares taken up so far will take the form of around 260 million Barrick shares and US$992 million in cash. Under Barrick’s friendly bid, which was sweetened on Dec. 22, Placer shareholders are offered US$22.50 in cash or 0.8269 of a Barrick share plus a nickel for each share tendered. The cash portion of the bid is capped at US$1.34 billion, while the scrip is limited to 333 million shares.

The company has also extended its offer until Feb. 3 to give Placer shareholders more time to submit their shares. “If Barrick is successful in acquiring 90% of the shares of Placer Dome under the offer, it intends to acquire all remaining shares by compulsory acquisition,” the company said in a prepared statement.

“We are pleased that Placer Dome shareholders have accepted our offer, and we welcome them as Barrick shareholders,” said Barrick’s chief executive Greg Wilkins. “We look forward to working with Placer Dome’s talented employees and, with them, commencing the process of integrating these two great companies.”

If it succeeds, the transaction would see Barrick leapfrog Denver-based Newmont Mining (NMC-T, NME-N) to become the world’s largest gold producer, with annual output of roughly 8.3 million oz. and reserves of 150 million oz.

As part of the deal, Goldcorp (G-T, GG-N) will pay US$1.485 billion in cash for Placer’s major Canadian assets, including the Campbell mine, adjacent to its flagship Red Lake gold mine in northwestern Ontario. Placer recently announced a downdip extension of Red Lake’s High Grade zone onto Campbell.

Shares in Barrick were off 46 at $34.89 in late-morning trading in Toronto following the news on Jan. 20. Placer fell 19 to $28.41, while Goldcorp dropped 21 to $28.69.