Denver-based Newmont Mining Corp. has signed a secrecy agreement that allows it to review the internal financial data of Placer Dome Inc., Dow Jones Newswires reported Tuesday, citing a person it didn’t identify.
Placer Dome, a Vancouver, British Columbia, mining company, is the target of an unsolicited $9.2 billion takeover bid by Barrick Gold Corp.
Dow Jones’ source said that Newmont was one of several companies reviewing the information.
Shares of Placer Dome rose 47 cents Tuesday, or 2.2 percent, to $21.98 based on speculation that other bids could be forthcoming. The stock has jumped 32 percent since Barrick’s bid Oct. 31.
“It’s logical” for Newmont to consider a takeover, said Patrick Chidley, an analyst in Stamford, Conn., for South Africa-based brokerage Barnard Jacobs Mellett LLC. Placer Dome is worth up to 20 percent more than Barrick’s offer, he said.
Speculation about Newmont’s possible interest in Placer Dome surfaced as gold prices rose Tuesday to the highest level in almost 18 years, nearing $500 an ounce.
Gold for December delivery on the New York Mercantile Exchange reached $495.90 Tuesday before closing at $492.90, a gain of $3.40 an ounce.
Officials of Newmont and Placer Dome declined to discuss the reported secrecy agreement.
“We don’t comment on market speculation,” Newmont spokeswoman Heatheryn Higgins told The Denver Post.
She referred to reports of Newmont’s signing the confidentiality agreement with Placer Dome as a “rumor.”
“In these kind of situations it’s entirely expected that companies or a company will kick the tires and sign a confidentiality agreement to get into the data room,” Barrick spokesman Vince Borg said from Toronto. “But it’s kind of ironic that a secrecy pact is publicly disclosed.”
Barrick isn’t threatened by speculation that Newmont may make a rival bid, Borg said.
“At the end of the day, our offer is going to be the successful offer and bid,” he said. “It’s received very good response from both Barrick and Placer Dome shareholders, and we think we’re offering a full and fair price for the company.”
As part of Barrick’s offer, Goldcorp Inc. agreed to buy some of Placer’s assets for $1.35 billion in cash.
Newmont probably would want to sell Placer Dome’s assets in South Africa, Chidley said.
“Placer will be gone” within the next year, Robert McEwen, Goldcorp’s former chief executive, said Tuesday in an interview in Toronto. “Maybe Newmont is not going after Placer. Maybe they are going after Barrick.”
All of the big producers of gold and base metals will “have the ability to look at Placer Dome’s assets right now,” said Haytham Hodaly, an analyst at Salman Partners Inc. in Vancouver. “Placer’s trying to maximize shareholder value, so it just makes common sense.”
Newmont’s interest may delay Placer Dome’s decision on whether to endorse the Barrick offer, said Bill Belovay, who manages $150 million in the BMO Resource Fund and BMO Precious Metals Fund at Jones Heward Investment Counsel in Toronto.
“It looks like Newmont’s going to be doing a due diligence, and that kind of thing takes quite a while, so Placer may more than likely come up with another delaying statement,” Belovay said in a telephone interview. “That’s how the game’s played.”
Shares of Newmont rose 2 cents to $47.22 in New York Stock Exchange composite trading. Barrick rose 35 cents to $32.65 in Toronto.
Denver Post staff writer Steve Raabe contributed to this report.
