VSE-listed stock could control Barrick-Newmont successor

General Oriental Investments (VSE), an investment firm controlled by Anglo-French financier Sir James Goldsmith, could emerge with the major share of the combined gold producing assets of Newmont Mining (TSE) and American Barrick Resources (TSE).

Listed on the Vancouver Stock Exchange since September, 1986, General Oriental holds what analysts believe is the “lion’s share” of the 49% Newmont interest acquired by Goldsmith and Jacob Rothschild from Hanson PLC, a British-American company, last December.

While a spokesman for General Oriental declined to comment when reached at the company’s administrative office in Grand Cayman, British West Indies, a Newmont proxy statement lists General Oriental as one of the “beneficial owners” of 33.2 million shares previously owned by Hanson.

The proxy circular indicates that General Oriental has control of about 28 million (86%) of the Newmont shares acquired from Hanson, while 15% are held by holding companies connected to the Rothschild group.

Should the Barrick-Newmont merger proposal be approved, General Oriental will hold about 18% or 50 million of the merged company’s approximately 280 million common shares, according to sources close to the company.

Toronto-based Horsham (TSE), a holding company controlled by Barrick Chairman Peter Munk, would be the second largest shareholder, with 11%, of a mining goliath capable of producing 2.6 million oz. gold annually.

Once listed in Hong Kong, General Oriental has about 143 million shares outstanding of which 73% are held by Goldsmith. A small portion (less than 10%) of General Oriental’s shares are also held by BGR Precious Metals (TSE), a closed-end investment fund which bought the stock as a cheap way of playing Newmont and 90.1% owned Newmont Gold (NYSE), North America’s largest gold producer.

Still an unknown entity in North American investment circles, General Oriental was trading recently at $7.50 in a 52-week range of $9 and $5.88.

A BGR spokesman, who asked not to be identified, said his company stumbled on General Oriental almost by accident when it was brought to BGR’s attention by one of their directors.

When The Northern Miner talked to Richard Harris, an administrator at General Oriental’s head office in Grand Cayman, he said he didn’t know why Goldsmith had chosen to list the company on Vancouver.

While Harris declined to provide details of the company’s activities over the phone, BGR says General Oriental had assets of $1.8 billion, including $315 million in cash and $282 million in short-term investments before some recent investments in oil.

Analysts are speculating that a merger with Barrick is being considered by the Goldsmith/Rothschild group as a means to get around a standstill agreement preventing them from acquiring over 50% of Newmont until November, 1997. But others believe Goldsmith, the 55-year-old billionaire who earned a fortune in the European grocery business, will eventually cash out leaving Munk as the merged company’s biggest shareholder. In exchange for the Newmont shares, General Oriental sold its 85% interest in Cavenham Forest Industries, controller of 1.7 million acres of U.S. timberland.

Toronto-based Bunting Warburg is among the investment firms chosen to prepare a fairness opinion on the merger proposal under which Barrick would exchange 1.8 of its shares for each share of Newmont Mining. If the deal goes ahead, Barrick will also acquire the 9.9% minority stake in Newmont Gold by swapping 1.845 of its own shares for each share of Newmont Gold.