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. Last Updated: 07/27/2016

Canadian Firm Bids to Forge Gold Giant

NEW YORK/MELBOURNE, Australia -- Canadian gold mining company Placer Dome Inc. on Sunday offered to acquire rival AurionGold Ltd. for $1.11 billion in stock, aiming to create a leading worldwide gold producer as prices for the valuable commodity continue to increase.

The offer, if accepted, would create the world's No. 5 gold mining company, producing more than 3.8 million ounces per year.

It also would form the second-largest mining company in AurionGold's home country of Australia -- the world's No. 3 gold producer -- with more than 1.2 million ounces of gold mined annually, Placer Dome said. The unsolicited bid comes as gold prices hovered near fresh highs in recent weeks amid fears about new attacks on U.S. landmarks, continued violence in the Middle East and the possibility of violence between India and Pakistan.

Those fears have helped boost gold company stocks worldwide, creating an attractive case for further consolidation in the industry.

Concurrent with the announced bid for AurionGold, Vancouver, Placer Dome said it continued to expect to produce more than 2.5 million ounces of gold and 189 million kilograms of copper this year.

The bid marks the second offer to acquire a large Australian gold mining firm in the last year. Late last year, Denver-based Newmont Mining Corp.'s offer to acquire Normandy Mining Ltd. sparked a heated bidding war with South Africa's AngloGold Ltd., ultimately won by Newmont for $2.1 billion.

Placer Dome chief executive Jay Taylor said he was not overly concerned about a rival bid arising for AurionGold because few firms could match the synergies his company offers. Placer Dome already operates two of AurionGold's major mines under a joint-venture arrangement.

"It's hard to believe somebody could make a better synergistic case than we can," Taylor said. "We know each other, and there's already a level of comfort between the two companies."

Placer Dome said the unsolicited offer would exchange 17.5 of its shares for each 100 AurionGold shares. Under those terms, the deal would value the Australian firm at $2.51 per share, a premium of more than 30 percent to the company's closing price Friday.

Harmony Gold Mining Ltd., AurionGold's leading shareholder, has agreed to support the bid and vote its 9.8 percent stake in favor of the acquisition, Placer Gold said.

To complete the transaction, Placer Dome would require the support of at least 50.1 percent of AurionGold's shares.