We Canadians know our mining companies are the best in the world, and now two of them are takeover targets of American companies. In April we brought you the news that WHEATON RIVER MINERALS and IAMGOLD planned to merge, creating a 1-million-oz/year gold producer. Enter the Americans who know a good thing when they hear about it. Two U.S. firms have made simultaneous offersGOLDEN STAR RESOURCES for Wheaton River and COEUR D'ALENE MINES for IamGoldthat could bust up the planned Canadian merger.
The original plan of IamGold and Wheaton River was announced on March 30. Their boards unanimously agreed to combine the two companies. In addition to the anticipated 1-million-oz of gold to be produced this year, the partners would have unhedged, proven and probable reserves of 9 million oz plus measured and indicated resources of 4 million oz. And total cash costs would be less than US$100/oz. Both companies had profitable first quarters: IamGold's earnings were up 70% and those of Wheaton River took a seven-fold jump. Management teams would be combined under the leadership of president and CEO Joseph Conway and co-chairs Ian Telfer and William Pugliese.
AXIOM GOLD CORP. (a new name for the new enterprise) has all the hallmarks of a real winner. No wonder the Americans suddenly sat up and took notice.
On May 28, IamGold and Wheaton River issued press releases saying they had received unsolicited proposals from Coeur d'Alene and Golden Star, respectively, to acquire all outstanding shares of the Canadian firms. Three days later IamGold and Wheaton River announced separately that their boards would not pursue the American offers. They urged their investors to support the original merger proposal.
I am inclined to agree with the IamGold and Wheaton River boards. They have sound reasons to reject the American offers. Together the two Canadian firms will be one of the world's top 10 gold producers. And, for purely selfish reasons, I want these Canadian companies to remain in Canadian hands.
There will be more news on this story, and CMJ will keep its readers updated. IamGold and Wheaton River shareholders are scheduled to vote on the proposed merger next week.
Perhaps they would be interested to know that the World Gold Council revealed that consumer demand for gold (jewellery and net retail investment) was up by 12% in tonnage terms and by 30% in dollar terms in the first quarter of 2004, compared to the somewhat depressed levels of a year earlier.