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MERGER ROUNDUP – The week’s news, happy and not

The merger-go-round continues to whirl. Not all of the recent proposals make headlines, but those with big-name com...


The merger-go-round continues to whirl. Not all of the recent proposals make headlines, but those with big-name companies and resistance from the target of the takeover remain in the news. Here is a sampling.

NOVAGOLD continues to reject the advances of BARRICK GOLD, despite Barrick’s increased all-cash offer of US$16.00/share for the smaller company. Barrick’s offer is too little, say NovaGold executives. The two are partners (NovaGold 70% and Barrick 30%) in the Donlin Creek gold project in Alaska. Barrick has the right to reverse those percentages by adding a further 40% to its interest, but NovaGold has hinted that it is likely Barrick will fail to meet the requirements to earn a larger interest in the project. Barrick’s offer for 50.1% of NovaGold expires on Nov. 7.

The war of words between the two gold producers has spilled over onto NovaGold’s Galore Creek porphyry copper-gold project in British Columbia. NovaGold is the sole owner of Galore Creek, and less than a week ago the company published its final feasibility study of the project. It would take US$1.8 billion to build a mine and plant that would average 262.0 million lb of copper, 165,000 oz of gold and 2.7 million oz of silver in each year of the 22-year life. Barrick has waded in with its opinion that the escalating costs for Galore Creek (capital up 64%, and copper production cost up 21%) from the economic assessment of a year ago should be putting downward pressure on NovaGold stock prices, making Barrick’s offer look generous indeed.

Vancouver’s IMPERIAL METALS is proceeding with its offer for BC METALS CORP. This is an all-cash offer worth $0.95 per bcMetals share. The board at bcMetals continues to recommend that its shareholders reject the offer from Imperial in favour of one it negotiated with GLOBAL INTERNATIONAL JIANGXI COPPER MINING of China. The deal with Jiangxi involves creating a joint venture (25% bcMetals) to develop the Red Chris copper-gold project in British Columbia. Imperial’s bid was set to expire on Nov. 2 at 4 pm Pacific time.

TASEKO MINES has waded into the fray, offering $1.05 per bcMetals share. The new offer is subject to a number of conditions, namely 1) that 90% of bcMetals shares are tendered; 2) the concurrent acquisition by Taseko of the minority shares of bcMetals subsidiary, American Bullion Minerals; and 3) that bcMetals shareholders reject the shareholder rights plan and the proposed joint venture with Jiangxi. The third condition will come up for a vote at a special bcMetals meeting at the end of this month.

Word is out that Brazil’s COMPANHIA VALE DO RIO DOCE’s (CVRD) takeover of Toronto-based INCO LIMITED has cost it US$13.8 billion so far. CVRD acquired 174.6 million shares or 75.66% of the Canadian nickel producer. The new owner intends to take up all the remaining Inco shares, bringing its total investment to US$17.6 billion.

LUNDIN MINING and EUROZINC MINING CORP. have finalized the merger of those two companies. Business will continue under the name Lundin Mining.

Toronto’s BLUE PEARL MINING has completed the US$575 million acquisition of THOMPSON CREEK MINING. The Idaho-based molybdenum producer owns the Endako moly mine in British Columbia.

LUMINA RESOURCES and WESTERN COPPER, both of Vancouver, have signed a definitive plan of arrangement whereby Western Copper will acquire all the outstanding shares of Lumina.

(When mergers go smoothly, there is not a lot to say about them. M.S.)


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