Don't let Barrick steal NovaGold to feed the gold suppression scheme
Who Ya Gonna Call ... Ghostbusters?
No -- Goldbusters!
By Bill Murphy, Chairman
Gold Anti-Trust Action Committee Inc.
Wednesday, August 9, 2006
I could not resist that title, one based on the Bill Murray (not to be confused with Bill Murphy) movie "Ghostbusters," for an obvious reason now to be explained -- along with my sudden trip to Vancouver.
Last evening I had the pleasure of having dinner with Rick Van Nieuwenhuyse, president and CEO of NovaGold Resources. As most of must know, Nova is suddenly fighting a hostile takeover bid from Barrick Gold.
In days of yore Rick, born in Belgium, was head of exploration for Placer Dome before deciding to build his own company. He was very aware that the former chairman of Placer, John Willson, was one of GATA's first corporate supporters. (When Willson retired, Placer went anti-GATA and began to hedge its gold production at around $300 per ounce.)
At the moment the most significant happening in the gold world is Barrick's bid for Nova. For many reasons this cannot be allowed to succeed at a price less than $30 per share. (Nova this week has been trading a little below $17.) For their own interest and the interest of a free gold price, all gold shareholders, whether they own Nova shares or not, must OPPOSE Barrick's bid.
* Placer Dome got fouled up and only fiddled around with some of the NovaGold properties in which they were joint partners.
* Having taken over Placer Dome, Barrick was like a breath of fresh air to NovaGold because it promised to spend a lot of money to drill the properties at an aggressive pace.
* NovaGold laid out the entire deal to Barrick, and all was hunky-dory for Nova's shareholders until, OUT OF NOWHERE, Barrick launched a hostile takeover bid -- and while Van Nieuwenhuyse was on vacation in Italy.
* Barrick's hedge book is mega-toxic and so the company is desperate for the unhedged gold in the ground at NovaGold, with which Barrick would extricate itself from a nightmare. Taking over NovaGold will help Barrick immensely. This cannot be allowed to happen UNLESS Barrick has to pay so much that it impairs their credit situation:
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TORONTO (Standard & Poor's) July 25, 2006 -- Standard & Poor's Rating Services today said it placed its 'A-' long-term corporate credit and senior unsecured debt ratings on Barrick Gold Corp. on CreditWatch with negative implications after the company announced an unsolicited US$1.53 billion takeover of NovaGold Resources Inc. (unrated). The 'A-2' CP rating on Barrick is affirmed.
The CreditWatch stems from the increased risk in Barrick's conservative financial profile, which is currently supported by large cash balances that contribute to low net debt leverage.
"The company has stated that it would fund the acquisition of NovaGold with cash and debt, which will weaken its funds flow to debt metrics," said Standard & Poor's credit analyst Donald Marleau.
The assets to be acquired are development properties that generate no appreciable cash flow, nor will they without substantial development capital expenditures. On the other hand, the assets will enhance Barrick's operating profile over the longer term by increasing reserves and resources in Alaska and British Columbia, which are areas of low political risk. In addition, the acquisition of NovaGold adds the 30% of the Donlin Creek development project that Barrick did not already own, while the parallel acquisition of Pioneer Metals Corp. (unrated) for C$65 million will consolidate Barrick's land position around NovaGold's Galore Creek project in northern British Columbia.
Standard & Poor's expects to resolve the CreditWatch within a few weeks. The rating outcome will take into account the probability of Barrick successfully completing the NovaGold acquisition as proposed and the resultant effects on the company's financial profile.
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* If Barrick is forced to pay up, it will severely hurt the company's credit standing and ability to hang in there with the increasingly vulnerable Gold Cartel.
* The flagship property of NovaGold is Donlin Creek in Alaska, a 28.5-million ounce resource. That is the figure the company is allowed to use due to stringent filing requirements. Barrick knows that the gold at Donlin Creek is closer to 50 MILLION OUNCES because Barrick played good guy to Nova to learn everything before turning to their usual bad-guy drill. Barrick KNOWS!
* Some of the smartest people I know tell me that anything under $30 per share for NovaGold can be considered practically theft by Barrick and an insult to deserving NovaGold shareholders. In response to NovaGold's appeal to GATA, we ask the entire GATA ARMY and to the whole gold world to make sure that Barrick is unable to takeover NovaGold for anything less than that price. GATA consultant Adrian Douglas, a substantial NovaGold shareholder, puts it in perspective:
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Here are some thoughts on Barrick's hostile bid for NovaGold.
NovaGold's board is planning to send an e-mail detailing its assessment of the Barrick offer (whether the offer is fair) and advising shareholders whether to sell their shares to Barrick.
But Barrick is not the Barrick of old. It is no longer a company that has some rumors floating around its hedging practices. It is a company where some detailed facts are now available about its complicity in the suppression of the gold price. First and foremost is Barrick's own confession to manipulating the gold price on behalf of the central banks, as admitted in a filing in U.S. District Court in New Orleans, cited in this GATA dispatch:
That GATA dispatch also cites a speech by William R. White of the Bank for International Settlements that admits the central bank scheme to suppress the gold price.
A report by the Chevreux brokerage house of Credit Agricole confirms many of the findings of GATA.
A recent report by the International Monetary Fund -- http://www.gata.org/node/4123 -- confirms what GATA has claimed for many years: that central banks treat gold in the vault and gold receivables as the same line item. This means that gold loaned out or swapped to be sold into the market to suppress the gold price has been "invisible: to gold market participants, as it still appears on the central banks' balance sheet as if it were in the bank vault. This gives a totally erroneous and deceptive impression of an abundant supply of gold when in fact mine supply cannot meet demand.
The scheme to suppress gold is FACT and PUBLIC RECORD. It has been admitted by key officials. Barrick's involvement in the scheme is also FACT. Barrick admitted to it when it told the federal court that it was acting on behalf of the central banks and wanted to share their immunity from suit.
GATA consultant Robert K. Landis pointed out in his essay at GoldenSexant.com (March 24, 2006, "Now They Tell Us: BIS Confirms Rigging Gold Prices," http://www.goldensextant.com/ ) that because there is a public record that the BIS and central banks manipulate the gold price when they feel it is "useful," gold company executives have a fiduciary responsibility to declare this to their shareholders when issuing a prospectus for new offerings of shares and securities.
By extension I would say that Novagold has a fiduciary duty to inform its shareholders of the background of Barrick and its activities as essential information in helping them decide on Barrick's hostile offer.
This is where I see that GATA can assist NovaGold -- providing the company and its shareholders with appropriate information so that the company will not fail to uphold its responsibility to shareholders.
If gold had only kept pace with inflation it would now be at $2,000 per ounce, quite apart from the upward influence on the price of shrinking supply and increasing demand. A gold price like that would value NovaGold at $145 per share, not the $14.5 offered by Barrick.
That is, Barrick is complicit in the scheme that has caused NovaGold to be 90 percent undervalued.
So it is unthinkable then that Barrick should be allowed to acquire NovaGold at that price.
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* If Barrick is forced to pay up for NovaGold, it will be a landmark deal that will affect the takeover of other gold companies. The price of gold is going to go nuts in the years ahead. The only reason the price of gold is not at least twice what it is today is because of the heinous and corrupt Gold Cartel. They must not be allowed to profit from this corruption.
* Thanks to NovaGold, GATA now has the practical opportunity to capitalize on all we have accomplished over the years. Many of our supporters have rightly suggested doing this and doing that and doing some other thing -- much of which we have already done, in many cases to no avail, as we have gone to the financial and mining industry establishment to correct the wrongs. In this case we don't need the establishment. We need only NovaGold shareholders. We need only to make everyone aware of what is going on here, and that is JUST WHAT WE ARE GOING TO DO.
GATA is asking that our entire ARMY mobilize to win the day for all of us.
* Barrick is going to pay a dear price for being what it is and for what it has done to help the Gold Cartel keep the gold price down. For starters, and we are only warming up, GATA would like the ARMY to contact NovaGold's major shareholders to oppose the Barrick offer for the reasons cited above.
With just the following, we can reach around 30 percent of NovaGold's shareholders:
Sprott Asset Management Inc 4.65%
Snyder Capital Management LP 3.78%
Royce & Associates Inc. 3.09%
NWQ Investment Management Co. LLC 3.04%
Wells Fargo & Co. 2.61%
Neuberger Berman LLC 11.03%
Blackrock Inc. 1.81%
This is VERY doable if you all will make an effort. Take a little time and contact these firms and fill them in for their own benefit.
What struck me the most during my meeting with Rick Van Nieuwenhuyse was a conversation he had with his 8-year-old son, who said of Barrick: "Dad, this means they lied to you." Rick could not disagree. Even more, his son is a big "Star Wars" fan and in his world and NovaGold's, Barrick is now the Evil Empire and it must be defeated.
NovaGold has requested GATA's "Force" to defeat the Evil Empire of the Gold Cartel and its agent, Barrick Gold. We are warming up to do just that.