The new bid will expire Jan. 29 and remains conditional on Barrick’s acquiring at least 50.1% of AG’s shares on a fully diluted basis, including the 9.9% of the outstanding shares already owned by Barrick. The major also stipulates that AG must remove its newly adopted shareholders’ rights plan.
By acquiring 100% of the Veladero property, the major hopes to tie up all the ground in the area along the Chile-Argentina border. Barrick already has a 40% interest in the project, of which AG is the operator.
“Barrick is confident that a majority of Argentina Gold’s shareholders will accept this full and final offer,” says the former’s president, Paul Melnuk. He adds that the Veladero property would supplement Barrick’s existing land position, while describing the major’s nearby Pascua property as an independent stand-alone project.
At presstime, Argentina Gold was meeting with its financial and legal advisors. The company intended to respond to Barrick’s latest offer on Jan. 22.
When asked what AG thought of the new offer, Sophia Shane, the company’s manager of corporate development, said: “We think it’s a step in the right direction, but it [AG] is worth more.”
The shareholder’s rights plan is designed to provide AG with enough time to consider all alternatives to hostile takeover bids. AG has appointed ScotiaMcLeod as its financial advisor to assist the company in considering Barrick’s offer. The junior has stated that the operative terms of its plan are essentially identical to those of Barrick’s shareholder’s rights plan. The only difference is that the major’s plan is in effect until 2002, whereas AG’s expires on Feb. 19 of this year.
Both plans define a “permitted bid” as one that is made to all shareholders and is open for at least 60 days. At the end of this period, if at least half of the outstanding shares are tendered (not including those held by the offerer and related parties), the offerer may buy the shares. The bid must then be extended by another 10 days to allow other shareholders to tender.
Barrick has requested a hearing with regulatory authorities to discuss removal of AG’s shareholder’s rights plan. The major says it revealed its intention to make an offer for AG on Dec. 9, 1998, and reasons that by Jan. 29, 1999, the offer will have been on the market for more than 50 days.
AG, however, says Barrick’s formal offer was not made until Dec. 18 and that, therefore, by Jan. 29, it will have been on the market for roughly 40 days.
Amable North
Barrick’s latest offer follows a report that AG has intersected gold mineralization at Veladero’s Amable North target, about 600 metres north of Amable. The target is defined by coincident geophysical and geochemical anomalies and is thought to represent the northward repetition of the Amable target along the eastern flank of the Cerro Pelado and Filo Federico diatreme systems.
Hole 100 cut through 80 metres grading 1.15 grams gold and 11.8 grams silver per tonne, starting at a down-hole depth of 259 metres. Included in this intersection was a 33-metre intercept that averaged 1.7 grams gold and 12 grams silver, starting at a down-hole depth of 306 metres. These are only partial results; assays are still pending from the last 11 metres of the 350-metre-deep hole.
Geologically, the hole is similar to those drilled at the Amable target, which exhibited a transition from silicification to silica-jarosite alteration. The top of the mineralized zone in hole 100 is at an elevation of 4,350 metres above sea level — roughly the same elevation as the mineralized zones at Amable and Filo Federico. This is consistent with AG’s regional paleophreatic geologic model.
To date, two controls of mineralization have been postulated: a structurally controlled trans-tensional system that seems to repeat itself north of Amable; and a more ubiquitous, paleophreatic-induced mineralization.
The paleophreatic model is based on the theory that gold-bearing fluids from a magmatic source encountered the paleo-water table near the surface and precipitated the gold as a result of changes in temperature and ph (measure of hydrogen ion concentration).
Hole 98 was collared on the western side of the Filo Federico target and returned 145 metres grading 1.06 grams gold and 13.1 grams silver, starting at a down-hole depth of 50 metres. Included in this intercept was a 30-metre interval that ran 3.02 grams gold and 15.1 grams silver, starting at a down-hole depth of 93 metres.
Hole 98 has opened up the Filo Federico resource to the west, while enlarging the high-grade section defined by previously reported drill holes 56, 57, 58, 68 and 72. All these holes assayed above 1 gram per tonne, with intercepts containing 2-4 grams gold. The 30-metre interval grading 3.02 grams gold correlates with similar high-grade zones in neighboring holes and is expected to augment the 2-million-oz. resource at Filo Federico.
“What boreholes 98 and 100 prove is that we have about 300,000 oz. more gold to add to the resource.” says AG President J.P. Jones. “This system is much larger than the resource of 4.5 million oz. gold and 120 million oz. silver that is known to exist.”
The company plans to test the possible continuity between Filo Federico and the 400,000-oz. resource of the Northwest target, situated 500 metres to the west.
Hole 99 was collared 85 metres west of previously reported hole 85 (220 metres grading 1.7 grams gold and 69.81 grams silver) and returned partial results of 64 metres grading 0.12 gram gold and 57 grams silver, starting at a down-hole depth of 98 metres. This included a 36-metre interval averaging 0.2 gram gold and 79.6 grams silver, starting at 98 metres down-hole.
Hole 99 represents the most westerly test of the Amable target to date. As with previously reported holes 82 and 86, gold grades tend to decrease, while silver grades increase, along the western margin of the Amable target.
Hole 97 was collared on the northeastern flank of the Amable target and encountered gold and silver mineralization in a feeder zone outside of the main silicified zone. The hole encountered the main anomalous zone, farther to the west, at a point below the main mineralized horizon, which lies between 4,300 and 4,100 metres above sea level. At a down-hole depth of 104 metres, the hole cut 21 metres averaging 1.3 grams gold and 30.74 grams silver, followed by a 4-metre interval of 1.1 grams gold and 25 grams silver at 265 metres down-hole. At 287 metres down-hole, a 15-metre section averaged 1.1 grams gold and 15 grams silver.
AG will add US$1 million to its drilling budget for the current year. To date, 8,100 metres have been drilled and another 8,500 metres are planned. Barrick will contribute an additonal US$600,000 to the program. AG now has two diamond drills and two reverse-circulation (RC) rigs operating on the property. Core drilling will be employed to confirm results from the RC holes.
The first diamond drill hole, DDA1, was put down northeast of hole 90 and has reached a depth of 137 metres. RC holes 101 and 102, situated 70 metres southwest of hole 96 and 50 metres east of hole 76, respectively, have been completed, with assays pending.
Holes 103 and 104 are in progress. The former was collared 50 metres east of previously reported hole 96 (202 metres averaging 2.61 grams gold and 21.43 grams silver); the latter, 50 metres southwest of previously reported hole 98 (145 metres of 1.06 grams gold and 13.05 grams silver), in the area between the Filo Federico and Northwest targets.
More drill results, together with an updated resource estimate, are expected shortly.
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