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UPDATE 2-Timmins urges Capital Gold to consider offer
December 3, 2010 / 4:50 PM / 7 years ago

UPDATE 2-Timmins urges Capital Gold to consider offer

* Says offering ‘less onerous terms’ than Gammon

* Timmins values Capital Gold at $4.48/shr

* Analysts say Timmins offers bigger premium than Gammon (Adds analysts comments, details; in U.S. dollars unless noted)

TORONTO, Dec 3 (Reuters) - Timmins Gold TMM.V said on Friday that it had asked the board of Capital Gold CGC.A CGC.TO to reconsider its offer for the company, which has already agreed to be bought by Gammon Gold GAM.TO.

On Oct. 1, Gammon said it would buy Capital Gold in a friendly $288 million cash and share deal as the mid-tier miner looks to strengthen its position as a leading gold producer focused on Mexico. [ID:nN01237883]

Timmins, which values Capital Gold at $4.48 per share, said it would be willing to enter into an agreement that “imposes far less onerous terms” than the Gammon offer.

It also said its all-share offer exceeds the Gammon bid by 22 cents per share.

“We’ve been favoring the Timmins offer,” said Stuart McDougall, an analyst with Jennings Capital. “Just on a price basis, it’s got a higher premium than the Gammon offer.”

He added that if Capital does not respond to the latest bid, Vancouver-based Timmins will “go hostile and let the shareholders of Capital Gold decide.”

In its October release, Gammon said its offer was worth $4.57 a share based on its Sept. 24 closing price of C$7.44. Gammon’s shares were at C$7.56 on the Toronto Stock Exchange on Friday.

In a note to clients, Octagon Capital analyst Hendrik Visagie said that, based on Thursday’s close, the Gammon offer was worth $4.53 per Capital Gold share and the Timmins Gold offer was worth $4.68.

Gammon is being advised on the deal by Dundee Securities and UBS Canada, while Capital’s financial adviser is Cormark Securities.

Capital Gold owns the El Chanate gold mine in Sonora, Mexico as well as the Orion development project in the country’s Nayarit province.

Shares of Timmins were up 2.38 percent at C$2.15 on the TSX Venture Exchange, while Capital Gold’s shares were up 3 percent at C$4.78 on the Toronto Stock Exchange.

$1=$1.00 Canadian Reporting by Julie Gordon in Toronto and Aftab Ahmed in Bangalore; editing by Rob Wilson

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