Gold Fields’ sweetener sour to Scion

Wednesday brought new twists to the proposed Gold Fields (GFI-N, GFIJ-J) and Bolivar Gold (BGC-T) deal as Gold Fields bumped its bid, and Bolivar extended its voting deadline by two days.

The moves come as a last ditch attempt to win shareholder approval, but the largest single holder of Bolivar common shares, and leading critic of the proposed deal, Scion Capital, says the increase is not enough not nearly.

In a release issued on Wednesday, California-based Scion calls the increase an “insult to Bolivar shareholders”.

“It’s all about Gold Fields not having the votes to get the deal done, and playing a game,” says Scion’s president Michael Burry. “If they bump it up a little they believe they can get the marginal voters…It’s gimmicky.”

Burry says the deadline was extended to allow one or two large shareholders to change their vote.

Bolivar extended the voting deadline to Thursday, Jan. 12, 8 a.m. from its original date of Jan. 10.

“Much better returns than 6.7% are coming,” Burry said in the release. “Comparable stocks were up by as much as 20% yesterday alone.”

In the past month, fellow junior’s with operations in Venezuela, Crystallex International (KRY-T) and Gold Reserve(GRZ-T), have outpaced Bolivar significantly.

Since Dec. 14, 2005 Crystallex has gained 41% or 95, up to its Wednesday, Jan. 11 close of $3.25. Gold Reserves has gained 78% or $2.48 since Dec. 14. On Wednesday in Toronto it closed at $5.68.

By comparison Bolivar’s shares gained only 1% or 6 from Dec. 14 2005 until Jan. 9.

On Wednesday, news of Gold Fields sweetened offer brought a 6% or 20 increase to Bolivar’s share price, bringing them to $3.16 on roughly 14.5 million shares.

The new offer brings an increase of 6.7% or US$30 million, bringing the new total to roughly US$360 million, up from the original US$330 million offer –or $3.20 a share in comparison to its original $3.00 a share offer.

Scion has criticized the offer both in a dissident circular issued in late December, and in numerous press releases for not reflecting gold’s 25-year high price, nor the upside of Bolivar’s Choco 10 project in Venezuela. Scion also says Gold Fields has played off the market’s over-reaction to risk attached to doing business in Hugo Chavez’s Venezuela.

While Gold Fields says it hasn’t talked with Scion directly, it admits its latest offer is connected to Scion’s criticisms.

Gold Fields’ head of corporate development, John Munro, told Reuters, “We’ve spent a lot of time in the market talking to shareholders and also taking account of how the shares are trading.”

Munro went on to say,”when I referred to looking to what’s happening in the market, I would regard Scion as part of that voice.”

Scion increased the heat on Monday, Jan. 8 when it took its fight to the Ontario Superior Court. Scion is arguing that Gold Fields should be prohibited from voting on its recent purchase of about 5.2 million shares in Bolivar. Scion says the purchase exceed the 20% ownership threshold, meaning it should be subject to stricter take-over bid guidelines.

Munro told Reuters Gold Fields is optimistic about winning the shareholder vote, even though, he said, the role of Scion is uncertain.

“Whether they’re a long term shareholder or just an arbitrage player, I don’t know,” Munro is quoted as saying. “Whether this satisfies them, we would hope so, and we look forward to getting into the meeting and seeing the final vote.”