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Manipulation of gold price amid Greenspan testimony is taken for granted now
Wheaton River sells silver production
for over C$262M, creates Silver Wheaton
By Nancy Carr
Thursday, July 15, 2004
TORONTO -- Wheaton River Minerals Ltd. is
selling all its silver production to a
company that is to be renamed Silver
Wheaton Corp., complicating a hostile
$2.7-billion takeover bid by U.S. miner
Coeur d'Alene Mines Corp. of Idaho.
But that's just a coincidence, according
to Wheaton chairman and chief executive
Ian Telfer. "The Silver Wheaton
transaction has been in the works for
almost six months and has in no way been
created as a response to the Coeur
offer," Telfer said Thursday in a
conference call from Vancouver.
He said the silver deal won't close
until September, a few weeks after
the Aug. 27 deadline for Wheaton
Minerals shareholders to tender to
silver miner Coeur's offer.
"Should (Coeur's) offer be successful,
they would have the right to not
proceed with this."
Wheaton said investment company Chap
Mercantile Inc. has agreed to buy all
silver produced by Wheaton, from its
Luismin mine in Mexico, for an upfront
payment of $262 million in cash and
Chap common shares, plus $3.90 US an
Chap will change its name to Silver
Wheaton Corp. and will probably move
from the junior TSX Venture Exchange's
low-volume NEX market to the Toronto
Stock Exchange in the fall, Telfer
Coeur d'Alene formally made its bid
to take over Wheaton River this week
by filing registration statements in
the United States and it is expected
to make a similar move in Canada soon.
Wheaton management has resisted the
takeover since it was first proposed
in late May and a special committee
of the company's board of directors
has yet to advise shareholders on
whether to tender to Coeur's bid.
A Coeur spokesman was not available
Thursday morning to comment on Wheaton's
But Telfer said because Coeur and Wheaton
River used the same Canadian law firm,
the deal may have been known to Coeur
management before its formal announcement
He said Silver Wheaton will be "a pure
silver play" and Wheaton will continue
to own 80 percent of Silver Wheaton.
Wheaton River will remain primarily a
gold producer, with some copper
production as well.
"Wheaton River, of course, has a gold
focus, and 18 months from now when our
other two mines under construction
start up, silver will have declined to
11 percent of the Wheaton revenue.
Therefore, it has become a smaller
and smaller part of our story," Telfer
"Typically, silver companies trade at
higher market multiples than gold
companies, so we felt that the value
of this silver was not being reflected
in our share price or to our
shareholders, so this was a way to
unlock that value."
Last week Iamgold Corp. shareholders
voted down a merger proposal with
Wheaton River, leaving them 10 days
to consider a takeover bid from
Golden Star Resources, a Denver-based
company listed on the TSX with gold
mines in West Africa. Iamgold has
characterized Golden Star's
$1.2-billion cash and shares bid as
On Wednesday, Wheaton announced
financiers Frank Giustra and Neil
Woodyer were stepping down from its
board. The two wanted to remove any
question of perceived conflicts of
interest relating to their dual roles
as advisers to Wheaton River and as
directors, the company said.
Giustra's company, Endeavour Financial
Corp., will continue to act as a
financial adviser to Wheaton River and
about 20 other companies in the mining
sector. Giustra is Endeavour's
chairman and Woodyer is its managing
Meanwhile, Iamgold has adopted a
one-month shareholder rights plan or
"poison pill" to block hostile
takeover bids like the one proposed
by Golden Star Resources.
The rights plan would block an
unwelcome takeover offer by giving
stockholders the right to buy shares
at a 50 percent discount to the
market price if a bidder acquires
20 percent or more of Iamgold shares.
Shares in Wheaton River were unchanged
at $3.81 Thursday on the Toronto stock
market, while Coeur was up 5 cents at
Shares in Chap Mercantile (NEX:CPC.H)
traded up 40 cents at 65 cents.
Iamgold (TSX:IMG) was off seven cents
at $8.51 and Golden Star (TSX:GSC)
gained eight cents to trade at $6.34.
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