Glamis boss plays 'pure gold' card
Says his bid for Goldcorp would result in stock market premium
By PETER KENNEDY
Thursday, February 10, 2005 - Page B4
VANCOUVER -- Glamis Gold Ltd. made a last-minute pitch yesterday to woo shareholders of Goldcorp Inc., who will vote this morning on a proposed $2.4-billion merger with Wheaton River Minerals Ltd.
A combination with Glamis would be a more natural fit, and would create a company that would ultimately be the "go-to gold stock of the future," said Glamis chief executive officer Kevin McArthur.
He said it would be assured of the stock market premium that investors usually assign to pure gold companies.
The pledge came after shareholders of Reno, Nev.-based Glamis voted to back the company's plan to launch a $2.8-billion (U.S.) share swap bid to take over Goldcorp.
Speaking to reporters in Vancouver, Mr. McArthur said his company's polling figures show that Goldcorp shareholders will vote against the proposed deal with Vancouver-based Wheaton River. "Our numbers indicate it is going to be close."
Mr. McArthur was speaking after Glamis shareholders voted 80.1 per cent in favour of lifting a restriction on the number of shares it can issue to fund its sweetened takeover bid for Toronto-based Goldcorp, which owns the rich Red Lake mine in Northern Ontario.
On Tuesday, Goldcorp moved to persuade its shareholders to back the Wheaton River deal by offering them a special 50 cents-a-share dividend if they vote in favour of the deal. Goldcorp CEO Robert McEwen said his company's board of directors had rejected the revised bid from Glamis, calling it "inadequate.''
Based on the spread in value between the share prices of Glamis and Goldcorp, analysts say they believe that the Goldcorp-Wheaton River transaction will ultimately succeed.
On the Toronto Stock Exchange yesterday, Glamis rose $1.40 to $21.40, while Goldcorp gained 34 cents to $17.20. Wheaton River shares rose 11 cents to $3.99.
Analysts said the rise in Glamis's stock price suggests investors believe the company won't have to dilute its existing shareholders by issuing stock to take over Goldcorp. "This suggests that their [Glamis's] deal may not be the one that wins,'' said Steven Butler, of Canaccord Capital Corp. in Toronto.
Yesterday, Goldcorp said that Fairvest Corp., Canada's leading independent voting advisory firm has, reaffirmed its recommendation that its clients, including institutional investment firms, mutual funds and other fiduciaries, back Goldcorp's plan to merge with Wheaton.
"We are very pleased to see that both of the leading independent voting advisory firms, Fairvest and Glass Lewis & Co. conducted independent and comprehensive reviews and respectively confirmed the advantages of the Goldcorp-Wheaton River transaction for Goldcorp shareholders," Mr. McEwen said.
"The Fairvest and Glass Lewis recommendations to vote for the Wheaton transaction are in keeping with the recommendation of our entire board of directors: Wheaton is the right deal for all Goldcorp shareholders," he added.
But Mr. McArthur fired back yesterday, saying that Glamis and Goldcorp are more natural partners. "We think the combined company will be the go to gold stock of the future,'' he said.
He said the combination will also benefit from reserve additions at Goldcorp's Red Lake mine as well as production from Glamis's new Marlin mine in Guatemala.
The $140-million (U.S.) Marlin project was the target of protests in Vancouver yesterday by environmentalists and representatives of indigenous farming communities near the site.
"What about the mess that is going to be left behind when mining is finished,'' said Lix Lopez, a member of the Mayan community in Vancouver.
But Mr. McArthur insisted yesterday that his company is the victim of a well organized campaign to highlight the risks associated with operating in Central America.
He also said the 250,000 ounce-per-year operation is to begin production in the fourth quarter of this year. "In spite of what we have seen in the tabloid press, we have some very strong support for the mine in local communities."
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