Tuesday, April 20, 2010

Lihir Gold (ASE:LGL) Bidding War About to Start?

There's no doubt Lihir Gold has positioned itself strongly as a takeover target, and after they rebuffed the offer from Newcrest Mining (ASE:NCM), growing interest from major gold mining companies seems to have created the atmosphere for a robust bidding war which will make the shareholders of Lihir Gold very happy once it's over and a winner emerges.

The longer this plays out, the more names of major gold production companies are being thrown about as to having an interest in Lihir.

Major gold companies like Goldcorp (TSE:G), AngloGold Ashanti (NYSE: AU), Kinross Gold(TSE:K), Newmont Mining (NYSE:NEM) and Barrick Gold (TSE:ABX) have all been mentioned as potential suitors of the company, and indeed have had talks of some sort with Lihir over the possibility of acquiring them.

Now the problem for these companies is they are going to have to pay a hefty premium, as there is no hiding the interest in Lihir, and their significant reserves offer a great boost to whoever buys them, although it's not going to be cheap.

A recent report stated Lihir should gold production at Lihir should increase to 1.5 million ounces as of 2016, not a insignificant amount by any measure.

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