T. Boone Pickens ups bid for Newmont to $6.3 billion

In a bid to stave off a hostile takeover bid by American corporate raider T. Boone Pickens, Newmont Mining Corp. — one of the largest gold miners in North America — just got bigger. The company, which holds a 90% interest in Newmont Gold, reports that Newmont Gold’s reserves have been increased by 14% to 14 million oz of gold in the ground from 12.3 million oz.

That reserve base, which has been labelled conservative by many industry analysts, is the largest gold reserve base in North America. Also, Newmont anticipates gold production by 1989 of one million oz, which would make the company the first North American producer to exceed the one million oz mark. Output in 1988 is forecast at 850,000 oz. At this rate, the company will be the largest gold producer on the continent. Placer Dome Inc., the largest gold producer in Canada, expects to exceed the one million oz mark in the 1990s.

All the revision in operating forecasts follows on the heels of a $5.6 billion (US) takeover offer by Mr Picken’s Ivanhoe Acquisition Corp. By increasing the value of the company’s assets, the Newmont board is attempting to undervalue the Ivanhoe offer.

Not to be outdone, Ivanhoe has upped its bid for a minimum 51% stake in Newmont to $95 (US) per share for a total bid of $6.3 billion. In Canadian dollar terms, that is approximately $8.5 billion. If successful, it will be one of the five largest corporate takeovers in U.S. history.

Newmont’s major shareholder, Consolidated Gold Fields, which holds 26.3%, has announced that it will take action to prevent the takeover bid from being completed.

Ivanhoe currently owns 6.65 million Newmont shares or 9.95% of its issued capital. The partnership includes Mr Pickens’ Mesa Ltd. Partnership, NRM Energy, and Vancouver-based Galactic Resources, headed by Robert Friedland.