IN A bid to become the world's largest goldminer, Barrick Gold of Toronto has made an unsolicited $US9.2 billion ($A12.3 billion) offer for another Canadian-based miner, Placer Dome of Vancouver.
A takeover would see a sizeable slab of Australia's gold mining industry change hands, shifting production of about 950,000 ounces a year to Barrick.
Australia is Placer Dome's largest gold-producing region, accounting for 26 per cent of its 2004 revenue. Placer Dome also produced 90 million pounds of copper in Australia in 2004.
Barrick is the world's No. 3 goldminer and the half-owner, with Newmont Mining, of Australia's biggest open-cut mine, the Kalgoorlie Super Pit. It is also spending $US350 million to develop the 230,000-ounce-a-year Cowal project in central NSW, with first production scheduled for the beginning of next year.
Barrick on Monday offered $US20.50 for each Placer Dome share, to be paid in a combination of shares and cash. Barrick spokesman Vincent Borg said Placer shareholders could elect to receive $US2.65 in cash and 0.6562 of a Barrick share, or US5¢ and 0.7578 of a share.
The offer represents a premium of about 24 per cent on Placer's Friday closing price.
Placer Dome shares soared $US3.44 to $US20.02 on the New York Stock Exchange, while Barrick fell $US1.95 to $US25.25.
Placer Dome said it would respond "in due course".
Barrick said if the bid was successful, it would sell some of Placer's assets to Goldcorp, another Toronto goldminer, for $US1.35 billion cash.
Although gold prices are high at present, mining companies have been curbed by rising costs and a lack of new, easily mined deposits. Those factors have fostered industry consolidation and, according to critics, have also led
to socially and environmentally harmful mining in many parts of the world.
Barrick chief executive Gregory Wilkins acknowledged those factors. "Our vision is to be the best goldmining company and to mine profitably and on a socially responsible basis," he said. "There's a tremendous potential for synergies."
Mr Wilkins added that the resulting company would be the lowest-cost producer among large multinational miners. "It will consolidate the gold industry's largest suite of projects and exploration projects," he said.
Barrick chairman and founder Peter Munk told Placer Dome about the bid shortly before it was publicly announced on Monday. Mr Wilkins said that the companies had held earlier, unsuccessful merger talks.
With production of 8.3-8.4 million ounces of gold a year, the combined company would surpass the present leader, Denver-based Newmont Mining, which produces 7.4 million ounces.
Mr Munk, 77, is one of Canada's best-known executives. In addition to Barrick, he founded Clairtone Sound, a defunct maker of consumer electronics, and Trizec Properties, a real estate company.
