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Goldcorp Bids $3.5 Billion for Andean Resources, Trumping Rival


Baker Steel knew about this.

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They obviously do not want to miss out on IDC!!

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Sept. 3 (Bloomberg) -- Goldcorp Inc., the second-biggest Canadian gold producer, agreed to buy Andean Resources Ltd. for C$3.6 billion ($3.5 billion), exceeding a rival offer to gain control of an Argentinean mine.
The cash bid values the Perth-based miner at C$6.50 a share, or 2.2 percent more than an offer from Eldorado Gold Corp. based on yesterday's close in Toronto trading. Goldcorp's bid has the approval of Andean's board, Vancouver-based Goldcorp said in a statement.
Global gold mining takeovers are at a record this year as producers are discovering less metal while the bullion price has advanced each year since 2001. Goldcorp and Eldorado are fighting over Andean's Cerro Negro project in Argentina, which may produce 285,000 ounces of gold a year from as early as 2012.
'A competitive process like this is symptomatic of the asset quality in the gold sector,' Ric Ronge, who helps manage the equivalent of $1.1 billion at Pengana Capital Ltd. in Melbourne, said in a telephone interview. 'With a pre- production asset like that of Andean, they're buying blue sky potential.'
Goldcorp is offering 0.14 of its shares for each Andean stock, or cash payment of C$6.50 a share up to a maximum of C$1 billion, it said, making it the fourth-largest gold mining takeover this year. The cash offer is 35 percent more than Andean's closing price yesterday in Toronto Stock Exchange trading.
Eldorado, based in Vancouver, bid 0.310 of a share for every one of Andean's, valuing each at C$6.36 based on yesterday's close.
Andean Climbs
Andean climbed C$1.95, or 41 percent, to C$6.76 at 11 a.m. in Toronto. Goldcorp fell C$1.73, or 3.7 percent, to C$44.45, and Eldorado declined 87 cents, or 4.2 percent, to C$19.66.
There have been 290 gold deals worth at least $38.4 billion this year, according to data compiled by Bloomberg. Bullion advanced to a record $1,266.50 in New York in June and is set for a 10th straight annual gain, the longest winning streak since at least 1920, attracting investment by fund managers including George Soros and John Paulson.
The Cerro Negro project is 'expected to generate significant gold production at low cash operating costs following a relatively short construction period,' Goldcorp Chief Executive Officer Chuck Jeannes said in the statement.
Cerro Negro has reported indicated resources of 2.54 million ounces of gold and 23.56 million ounces of silver, according to Goldcorp. That indicates Goldcorp is paying $1,339 an ounce for the asset, higher than the $1,250.95 price that gold closed at yesterday in London.
'Exploration Potential'
'Goldcorp is betting on the exploration potential of Cerro Negro,' said UBS AG analyst Jo Battershill. 'I believe there are 10 million ounces there.'
Goldcorp's Jeannes plans to boost annual gold output 58 percent by 2014 with new mines such as Penasquito in Mexico and the expansion of existing operations in Canada, Mexico and Argentina, according to the company's website.
********'It goes to show that good deposits are hard to find and there's a premium to be paid,' David Baker, managing partner at Sydney-based Baker Steel Capital Managers with $1.2 billion in funds, said by phone. 'There's more consolidation to come.'*********
Eldorado, Canada's fifth-biggest bullion producer by market value, made its share bid yesterday after an initial approach last month was rejected by Andean Resources, the company said in a statement.
Gold May Rise
Nancy Woo, Eldorado vice president of investor relations, couldn't be reached when contacted outside business hours following Goldcorp's bid. Barrick Gold Corp., based in Toronto, is the world's largest gold miner.
Bullion prices may reach at least $1,300 an ounce this year as investors seek a shield against financial turmoil, weak currencies and inflation, according to London-based GFMS Ltd.
Andean's financial adviser is BMO Capital Markets; its legal advisers are Fraser Milner Casgrain LLP in Canada and Corrs Chambers Westgarth in Australia. Goldcorp's financial adviser is CIBC World Markets, and its legal advisers are Cassels Brock & Blackwell LLP in Canada and Mallesons Stephen Jaques in Australia.