Richard Appel: Oil may go a lot higher, but for a different reason

Section:

By Nicole Mordant
Reuters
Thursday, May 27, 2004

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=5281148

VANCOUVER, British Columbia -- Two Canadian mining
firms due to merge next month received separate
unsolicited takeover offers on Thursday from two
U.S.-based miners looking to break up the planned
marriage.

Idaho-based Coeur d'Alene Mines Corp. offered $1.7
billion (C$2.5 billion) in stock and cash to buy
mid-sized gold producer Wheaton River Minerals Ltd.,
which agreed in March to an offer from rival Iamgold
Corp. to create one of the world's 10 biggest gold
miners.

Separately, Denver-based Golden Star Resources Ltd.
launched an all-share bid worth about $884 million for
Toronto-based Iamgold, a company with ambitions to
expand its gold portfolio outside of West Africa.

In an unusual move, Golden Star and Coeur, the world's
biggest silver producer, agreed that if they are successful
they will split the breakup fees from the Wheaton
River/Iamgold deal. The net result of this would be that
Coeur would pay Golden Star $26 million, according to
Golden Star.

Coeur, in a letter sent to Wheaton River chairman and
chief executive Ian Telfer, said that it was prepared to
offer the equivalent of $3.28 per Wheaton River share
(C$4.50) to acquire the Vancouver-based company -- a
14 percent premium to Wheaton River's closing stock
price on Thursday.

Salman Partners analyst Haytham Hodaly said that the
premium meant that Wheaton River shareholders would
be better off under the Coeur offer than the earlier Iamgold
bid. But he warned that the premium was small and could
be easily erased in a single trading day.

"Investors are going to to have to look at the qualitative
aspects as, on the quantitative aspect, (the Coeur offer) is
not that much more attractive," Hodaly said.

Both Wheaton River and Iamgold declined to comment.
Last week both said competing bids were unlikely.

Keen to elevate itself into the ranks of the major gold
producers, Iamgold unveiled a $2.2 billion friendly all-equity
bid for Vancouver-based Wheaton on March 30. However,
as the share prices of both have dropped substantially
since the announcement, the bid is now worth about $1.6
billion.

Wheaton River shareholders are due to vote on the Wheaton
River-Iamgold combination on June 8.

Hodaly said the speed with which the two unsolicited bids
were cobbled together was a surprise. "What isn't a surprise
are the bids after what has happened to Iamgold and
Wheaton's share prices," he said.

Amid concerns that it was overpaying for Wheaton River,
Iamgold's stock listed in Toronto has dropped 21 percent
since the union was announced. Shares of Wheaton,
which is also a substantial silver and copper producer,
are down 4 percent.

Golden Star said it had offered Iamgold shareholders 1.15
Golden Star shares for each Iamgold share, a 13 percent
premium on Iamgold's Thursday closing price on the
Toronto bourse.

"We believe that the proposed business combination
between Golden Star and Iamgold is more beneficial to
Iamgold and its shareholders than the previously
announced combination between Iamgold and Wheaton
River Minerals," Golden Star Chief Executive Officer Peter
Bradford said.

Coeur Chairman and Chief Executive Officer Dennis
Wheeler said a Coeur-Wheaton River union would
increase the U.S.-based miner's silver output by 45
percent. The Coeur offer has an enterprise value of $1.8
billion, including debt.

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