Vancouver — Goldcorp Inc. has struck a deal to buy Australian miner Andean Resources Ltd. for $3.6-billion in cash and shares, trumping a $3.2 billion all-share approach made hours earlier by Eldorado Gold Corp.
The two Vancouver companies were vying for Andean and its Cerro Negro gold project in Argentina, a contest that marks yet another battle by Goldcorp to gain control of a desired asset and a long pursuit by Eldorado.
Goldcorp, the world's second-largest gold producer by market capitalization, said the Andean deal helps it achieve a goal of boosting production and finding companies in low-risk geographic areas.
“This transaction fits that strategy perfectly, as Goldcorp’s strong financial position, technical expertise and track record of building mines responsibly and efficiently positions us to rapidly advance this project and maximize value for both Goldcorp and Andean shareholders and other stakeholders.,” Goldcorp chief executive officer Chuck Jeannes said in a statement.
Goldcorp's deal with Andean was announced overnight, hours after Eldorado said it has approached the Andean board with its offer. Goldcorp's bid, which has been approved by the Andean board, values the company at $6.50 per share compared to the Eldorado offer valued at $6.36
Goldcorp’s offer is a 35 per cent premium to Andean Resources closing price on the Toronto exchange Thursday.
“This acquisition by Goldcorp, an industry leading senior gold producer, attests to Cerro Negro’s potential,” stated Andean CEO Wayne Hubert. “I believe Cerro Negro will enhance Goldcorp’s growing quality gold production pipeline while complementing their already low cash costs profile. The Andean board of directors strongly believes that the shareholders of both parties will benefit from this business combination well into the future.”
Eldorado said in its release overnight that it had been looking at buying Andean for the past two years before presenting its offer.
It's the second time this year Goldcorp has scooped an asset from a peer, and the third battle for control of an asset by Mr. Jeannes, who has held the top job since early 2009.
In January, Goldcorp beat out Barrick Gold Corp. , the world's largest gold producer, for a controlling interest in the El Morro gold-copper project in Chile. Goldcorp bought the 70 per cent stake from the Chilean arm of global mining titan Xstrata PLC by lending $463-million to a smaller company called New Gold, which had a right of first refusal. New Gold agreed to transfer the stake to Goldcorp in exchange for an additional payment of $50-million, while retaining its 30 per cent interest in the project. Barrick is contesting that deal in court, alleging it was executed illegally.
Late last year, Goldcorp entered a bidding war with a joint-venture company called Minera Penmont S. de R.L. de C.V., owned by Newmont and Mexico’s Fresnillo, over a junior miner called Canplats Resources Corp., to gain control of the Camino Rojo project in Mexico. Goldcorp raised its offer twice to $300-million to win the fight.
