Barrick, Placer trade jabs

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

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

Placer added that 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.”

Barrick’s offer includes a 27% premium on Placer’s shares.

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

Barrick also took issue with Placer’s claim that its gold production would be on the rise by 2010, whereas Barrick’s would be on the decline by that point. Barrick says it hasn’t issued any guidance stretching that far into the future, alleging instead that Placer made its allegations on the basis of just one analyst’s work.

Barrick is offering 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.

After the markets closed on Friday, Dec. 2, Barrick asked the British Columbia Securities Commission to effectively strike down Placer Dome’s shareholder rights plan.

Placer responded in a Dec. 6 release: “By applying to ‘cease trade’ the (shareholder’s) rights at this time … Barrick is seeking to prematurely end the value-enhancing process Placer Dome has under way and thereby deny Placer Dome shareholders the opportunity to consider any potential alternatives to Barrick’s inadequate offer.”

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 the chief alternative to Barrick in a takeover of Placer — 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, and we expect that we will be able to stand alone if there is no better offer that comes to the table,” Handley says.

Print

Be the first to comment on "Barrick, Placer trade jabs"

Leave a comment

Your email address will not be published.


*


By continuing to browse you agree to our use of cookies. To learn more, click more information

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.

Close