Goldcorp, the Canadian gold miner, said on Friday that it would buy its Australian rival, Andean Resources, for US$3.4 billion in cash and stock, topping an all-share offer from Eldorado Gold.
The board of Andean Resources has backed the Goldcorp proposal and offered 0.14 a share of Goldcorp common stock, as well as US$6.17 for each Andean share.
The bid represents a 35 percent premium over Andean’s closing price in Toronto on Thursday and a 56 percent premium over its recent share price average.
Andean’s chief executive, Wayne M. Hubert, said the company’s board “believes that the shareholders of both parties will benefit from this business combination well into the future.”
Eldorado, based in Vancouver, British Columbia, could still come back with a higher offer. While Andean was in talks with Goldcorp before its friendly offer, the winning bid is 2 percent higher than Eldorado’s.
A person with direct knowledge of the matter, who asked not to be identified because he was not authorized to speak to the media, said that neither Goldcorp nor Eldorado had been aware that the other party was poised to bid.
Andean, which is based in Perth, Australia, and is listed on the Australian Stock Exchange, owns a large site called Cerro Negro in southern Argentina that is estimated to contain 85,047kg of gold and 85,047kg of silver. The gold is held in epithermal deposits, or long, narrow veins of quartz. These veins tend to have the mineral repeatedly along their length, meaning that a single find has great potential.
In a preliminary feasibility study released in July, Andean said that over the next five years, it would be able to produce gold for an average cost of US$60 an ounce (28.349g), calling Cerro Negro “one of the lowest-cost undeveloped gold projects in the world.”
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