Minorco rumor follows heavy trading in LAC

Despite easing bullion prices and declines in the gold and silver index on Nov 27 and 28, LAC’s shares surged to $13.63 and $14 on each day respectively. The buying was driven by large volume of 5.3 million shares over both days. Today, Nov 29, more than 1.3 million shares were traded before noon moving the stock to $14.25.

Sources told The Northern Miner that Minorco, the large South African-controlled mining conglomerate, has been the buyer. Officers of Minorco in Toronto, Luxembourg and London, England, would neither confirm nor deny the speculation when contacted by The Northern Miner.

“We cannot say yes or no,” said Keith Irons, vice-president of public affairs with Minorco in London, when queried if the company is building a position in LAC with the intent of mounting a takeover. A terse “no comment” came from a Minorco executive in Luxembourg.

A LAC spokesman said that the company “is unaware of any takeover.”

The lack of confirmation has had little impact on traders who continued to bid LAC’s shares higher. LAC has been considered a prime takeover target for several years. The company has no controlling shareholder and Peter Allen, LAC’s president, would be hard pressed to muster the financial resources required to prevent a hostile takeover.

Following LAC’s acquisition of 65% of Bond International Gold in October, the company will control annual gold production of more than one million ounces.

“Minorco looked at LAC in the past but the court case was an obstacle,” said one analyst. The court case between LAC and Corona Corp. over ownership of the Williams gold mine at Hemlo, Ont., was resolved in Corona’s favor earlier this year.

The role of Wood Gundy in trading LAC shares on Nov 27 and 28 has not gone unnoticed by investors. On Monday, Nov 27, Wood Gundy bought about one million of the 1.7 million shares traded. That represents about 5% of the 21- million unit offering issued by LAC just six days earlier. Gundy, which has been LAC’s broker of record for years, did not take part in the $294-million unit offering. One source reasoned that by buying 5% of the unit offering back on the market, a suitor would simply be maintaining his original 5% block which would have been diluted after the offering. Rules governing trading on the New York Stock Exchange, on which LAC has a listing, require that interests in excess of 5% be disclosed by companies.

Financially, Minorco is well-funded to take a shot at LAC. The company has liquid assets in excess of $2.5 billion. That would enable Minorco to buy 100% of LAC for cash. In October, 1988, Minorco withdrew its unsuccessful $6.1-billion(US) offer for control of Consolidated Goldfields.

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