William Resources aims to take over Swedish gold miner

A unit of William Resources (WIM-T) has submitted a bid to take over Swedish gold mining firm Terra Mining.

William is offering $33.25 per share, or $147 million, for the company, which is listed on the Stockholm Stock Exchange. If William succeeds, its annual gold output would likely triple.

William currently owns 75,000 shares, representing 1.7% of the votes and shares in Terra. Norsk Hydro, which holds 42.3% of the votes and share capital of Terra, has agreed to accept the offer, and a prospectus outlining the deal will be circulated.

Terra operates two gold mines in northern Europe: the Bjorkdal in Sweden, which produced 71,292 oz. in 1995; and the Pahtavaara in Finland, which started operating in July and is expected to yield in the range of 30,000 oz.

per year.

In addition, Terra owns the Barsele project, also in Sweden, where geological resources are estimated at 7 million tonnes containing 400,000 oz. gold.

As a result of acquiring Terra Mining, William hopes to produce 300,000 oz.

gold in 1997 at a cash cost of US$250 per oz. Total gold resources would exceed 12 million oz.

William’s offer for Terra Mining represents a premium of 23% over the company’s closing price on Nov. 1. Compared to the last 30-day average price for Terra Mining of 122.20 Swedish krona per share, the offer represents a premium of approximately 33%.

The offer is subject to the following conditions: that acceptance of the offer is such that William becomes the owner of more than 90% of Terra Mining’s shares; that, in the judgment of William, the acquisition is not rendered impossible or substantially more difficult as a result of legislation, a court decision, or other such external factor; that suitable financing be obtained by, and funds made available to, William necessary to complete the acquisition of Terra Mining.

To this end, William has entered into an agreement with a syndicate of underwriters led by Nesbitt Burns and Scotia McLeod, under which the underwriters have agreed to buy, for resale to the public, subscription receipts exchangeable for convertible debentures in the amount of $85 million, with the option to purchase debentures worth up to $12.75 million more.

In addition, William is in final negotiations with Gerald Metals of Stamford, Conn., and a banking syndicate for a term and revolving loan facility of up to US$75 million. This loan facility will be used to fund the balance of the Terra Mining purchase price.