Firms Try to Guard Against Takeovers: HOSTILE BIDS: Mining Companies Want to Protect Shareholders.

By Elizabeth Bluemink, Anchorage Daily News, Alaska

Jan. 6–The junior mining firm exploring the massive Pebble copper and gold prospect in Southwest Alaska is courting larger mine companies to join its Pebble endeavour.

Another junior firm exploring the big Donlin Creek gold prospect near Bethel has just survived a hostile takeover bid by its larger mining partner.

What do the two Vancouver, British Columbia-based companies have in common?

Both want new plans to protect the companies from a hostile takeover.

Such plans are common within the mining industry, but this is the first time Pebble explorer Northern Dynasty Minerals Ltd. has proposed one for its own shareholders. The plans contain a “poison pill” to fend off hostile bidders, said Mark Gelowitz, a litigation attorney with the Toronto corporate law firm Osler, Hoskin & Harcourt.

“If you swallow the pill, you are dead as a bidder,” Gelowitz said.

The global mining industry has been rocked by a series of massive mergers and hostile takeovers within the past couple of years. For example, Toronto-based Barrick Gold Corp. bought out Placer Dome, a large mining company with holdings in Alaska, including Cook Inlet coal leases and a share in the Donlin project.

“We’re out there talking to senior mining firms. We want to select the right company and we want that decision to be our decision,” explained Ron Thiessen, Northern Dynasty’s chief executive.

Northern Dynasty proposed its shareholder rights plan in mid-December.

NovaGold Resources Inc., the firm jointly exploring Donlin with Barrick, announced a proposal to slightly amend its shareholder rights plan in early December.

Both plans are subject to shareholder approval this spring.

NovaGold battled off a hostile takeover attempt on Dec. 7 by Barrick, one of the world’s largest gold mining companies.

Though its attempt to obtain the majority of NovaGold shares failed, Barrick now owns 13 percent of NovaGold’s shares.

Both companies’ plans would allow their shareholders 60 days to review any corporate takeover bids. That gives the companies more time to find other potential buyers.

If a company proposes a takeover bid that doesn’t meet the rules, shareholders not involved in the takeover could buy additional shares at a discount.

That would make it more costly for a hostile firm to acquire enough shares to buy out the mining firms, mining officials said this week.

“If a bidder ignores it and goes ahead with a bid, they get totally diluted out, no matter how many shares they buy,” Gelowitz said.

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Copyright (c) 2007, Anchorage Daily News, Alaska

Distributed by McClatchy-Tribune Business News.

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