Glamis filed a Dissident Proxy Circular with securities regulators on Jan. 17, inviting Goldcorp shareholders to tender proxies for the forthcoming meeting on Jan. 31. Goldcorp’s board is placing a motion before shareholders to approve the issuance of up to 200 million shares to Wheaton River shareholders.
Goldcorp’s bid for Wheaton River, launched Dec. 5, is an all-paper deal offering one Goldcorp share for four Wheaton. Glamis, which had been in talks with Goldcorp for a friendly merger in late 2004, went public with an offer of 0.89 Glamis shares for one Goldcorp, a deal similar to the one it had previously discussed with the Goldcorp board.
For Glamis, the principal selling point of the offer to Goldcorp shareholders is that Glamis pays a takeover premium for Goldcorp shares, whereas Goldcorp is paying a premium in its takeover offer for Wheaton. The proxy solicitation also warned Goldcorp shareholders of Wheaton’s significant dependence on copper revenue (from its Alumbrera mine in Argentina), suggested Wheaton’s gold production costs are depressed by its treatment of Alumbrera’s copper production as a byproduct credit, and attacked Goldcorp Chairman Robert McEwen’s sale of a large block of Goldcorp shares in December 2003 and his recent receipt of 400,000 new Goldcorp options.
Glamis is also selling itself as an operating company, in contrast to Wheaton’s status as a non-operating partner at Alumbrera. Wheaton does, however, operate the Peak gold mine in Australia and the Luismin silver operations in Mexico.
The Glamis bid appears to be driving a wedge between factions on the Goldcorp board. Goldcorp scheduled, then cancelled, a conference call along with Wheaton River Minerals on their proposed merger and Glamis’s competing takeover bid for Goldcorp. In a release, the company said the Goldcorp board’s Special Committee would be reviewing the Glamis offer to see if, contrary to the committee’s earlier opinion, the offer was different from an earlier offer Glamis had made to the Goldcorp board. Goldcorp recommended its shareholders await the board’s opinion on the Glamis bid.
Goldcorp’s own proxy solicitation for the Jan. 31 meeting showed that three Goldcorp directors — Ronald Goldsack, Stuart Horne, and James Hutch — were neutral on the Wheaton transaction, though the remaining five directors all recommended it. The board continues to favour the one-for-four merger with Wheaton, which would create a company owned 52% by Goldcorp shareholders.
Still, Goldcorp management also distanced itself from recent remarks by McEwen, saying “Mr. McEwen’s statements to date have been in his personal capacity, as a large shareholder, and not as a Director or Chief Executive Officer of Goldcorp.”
Goldcorp management may have been alluding to comments McEwen made to an analysts’ briefing in Toronto on Jan. 13, where he was quoted as saying he would be “the first one out the door” if the Glamis offer were successful. McEwen directly owns 6.4 million shares of Goldcorp and another 2.5 million options, which (assuming all the options were converted) would give him 8.9 million Goldcorp shares, tradable for 7.9 million Glamis shares, or about a 2.5% shareholding in Glamis.
McEwen, who took part in a teleconference for analysts on Jan. 13, was quoted as having criticized the relatively low earnings of Glamis in comparison to Goldcorp and the dilution of ownership Glamis was accepting to make the takeover deal. (A merged Glamis and Goldcorp would be owned 58% by Goldcorp shareholders.)
Glamis President Kevin McArthur, in a prepared statement commenting on Goldcorp’s appointment of investment house Bear Sterns as a financial advisor (joining GMP Securities), said “the hiring of a third investment bank is yet another needless waste of Goldcorp shareholders’ money.” McArthur was referring to N.M. Rothschild & Sons, which had been replaced by GMP after delivering an earlier fairness opinion on the negotiated deal between Glamis and Goldcorp.
Glamis’s offer has no fixed expiry date yet, but the company has scheduled a shareholders’ meeting to seek approval of the offer to Goldcorp on Feb. 9.
Glamis, meanwhile, has had to deal with problems on another front: local opposition to its Marlin development in Guatemala. Wire service reports from the country recounted a confrontation between local campesinos, who had blockaded the road to Marlin, and national police, who were escorting the truck carrying a ball mill to the project. The reports said a local resident was killed; later releases from anti-mining groups gave the names of two persons they said had been killed in the incident.
The national police, confirming the death of local resident Raul Castro, said their agents had not been armed, and Glamis claimed “anti-development activists” had spread rumours that the equipment would be used locally.
The truck continued on its way to Marlin after the road was cleared. There has been no confirmation of the death of the second person named by the activist groups, Miguel Tzorin.
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