UPDATE: Chinese firm retracts takeover bid for Allied Nevada Gold

Construction at Allied Nevada's Hycroft mine. Credit: Allied NevadaConstruction at Allied Nevada's Hycroft mine. Credit: Allied Nevada

A private Chinese exploration and development company that claims to own three gold mines in China valued at about US$15 billion and also operates assets in the rare earths sector has retracted a press release issued this morning stating that  it was making an all-cash offer of $7.50 per share for Allied Nevada Gold Corporation (TSX: ANV; NYSE: ANV).

Hong Kong registered China Gold Stone Mining Development said the press release was issued in error and without the advice of counsel.

Earlier in the day, Reuters news agency reported that Allied Nevada’s shares in New York were up 15.3% to US$4.97 per share in pre-market trading.

In Toronto, trading in Allied Nevada Gold’s shares were halted shortly before 9 a.m. at $4.69 per share and resumed at 1:15 p.m. At presstime the company’s shares were trading at $4.99 per share.

Allied Nevada responded to the news of the takeover bid in a press release that appeared on the TSX website at 12:53 p.m, stating that the company had received a letter from China Gold Stone on Jan. 13 that included a proposal but “for a number of reasons … seriously questions the credibility of the proposal.” Not only could it not find “any substantive published information” on China Gold Stone, Allied Nevada said, but it also could not find any public information that would indicate that the Chinese company has the financial resources to complete the proposed transaction.

In addition, Allied Nevada noted that, contrary to China Gold’s initial announcement, no tender offer had begun as under U.S. federal securities laws, a tender offer only commences upon the filing of a Schedule 14D-1 with the Securities and Exchange Commission, and “no such filing has been made.”

In the initial release announcing news of the bid, China Gold Stone Mining said that in recent years it has worked with China National Gold Corp. to develop and invest in global mining markets. State-owned China National Gold controls 39% of China Gold International Resources (TSX: CGG).

China Gold Stone Mining also stated that it had engaged Patterson Belknap Webb & Tyler as its legal counsel and CB Capital Partners in Newport Beach, California as its financial advisor. The advisory firm was set up in 2001 to deliver investment banking services to companies “seeking to profit from the opportunities which emerge during inevitable changes in the business cycle.” CB Capital’s founding managing partner, Christopher Baclawski, did not return requests for comment.

Allied Nevada’s Hycroft heap-leach gold mine, about 87 km west of Winnemucca in Nevada, produced 190,831 oz. gold and 882,224 oz. silver in 2013, up 39% and 11% respectively, over 2012.

Its new Merrill-Crowe plant started up in October 2013 and the company expects to produce 230,000-250,000 oz. gold and 1.7 million-2.0 million oz. silver in 2014.

Elsewhere in Nevada the company has six projects—Maverick Springs, Mountain View, Hasbrouck, Three Hills, Wildcat, and Pony Creek/Elliot Dome—in addition to about 100 early-stage properties scattered across the state.


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