EDITORIAL PAGE — Shark!

Following last week’s surprise announcement that mid-tier gold producer Royal Oak Mines had launched a takeover bid for senior gold miner Lac Minerals, news reports likened Margaret Witte, the formidable Royal Oak chief, to that least noble of all finny creatures, the “bottom-feeder.” This analogy springs from her penchant for mines that others reject as utterly unpalatable.

The Giant mine, near Yellowknife in the Northwest Territories, is one such example, as are Royal Oak’s Pamour holdings near Timmins, Ont. Newfoundland’s Hope Brook mine was another former writeoff that Witte & Co. whipped into lean, mean and profitable shape.

But with her strike at Lac, Canada’s third-biggest gold producer, the bottom-feeder tag has got to go. Clearly, this CEO is no lowly carp. Ever since her bold attempt at building the low-grade, high-tonnage Colomac mine in the Northwest Territories slipped out of her hands (or, as many say, was ripped out of her hands), she has become an insatiable shark cruising the waters for edible golden morsels.

But as brash as the Lac takeover seemed at first blush, it also seemed rather tepid — a little bit of cash ($3.75 per share) and a lot of Royal Oak paper (1.75 shares for each Lac share). Lac’s shareholders might be peeved at Lac chief Peter Allen for the company’s less-than-stellar performance of late. But this is no sure bet that Lac’s shareholders will go for the uncertainty associated with a young mining company such as Royal Oak. The actual bid reflects a value of $13.59 for each Lac share. But ever since the bid was announced, the value has been rising because Royal Oak’s shares have been moving higher. Prior to Royal Oak’s intervention, Lac shares were trading at about $12.50. (Compared with senior gold equities such as American Barrick and Placer Dome, Lac’s shares have not performed as well over the past year or so.)

At the outset, the Royal Oak bid did not look particularly appealing. However, as time passes, with still no word (at presstime at least) from Fortress Lac, with no competing bid surfacing yet, and with Lac’s big investors making favorable noises about the Royal Oak bid, it is becoming more plausible that Witte & Co. just might bring off the deal of the decade. If so, Royal Oak will take on considerable debt. But it could defray some of the expense with Lac’s own money (roughly $420 million sitting in the treasury). Or it might consider selling off Lac’s El Indio asset in Chile (surely Placer Dome, with its La Coipa mine in Chile, would be interested). We likely weren’t alone in noting that, during Witte’s presentation of the offer at a press conference in the plush King Edward Hotel in Toronto, her emphasis was almost exclusively on Lac’s Canadian operations — the two Bousquets and the Doyon mine being the plum producers.

Talking with Royal Oak afterwards, we were left with the same impression — that the focus was on the “synergies” the takeover afforded in Canada. After all, Royal Oak has a huge land position and a producer in the Timmins area, only a hop, skip and a jump from Lac’s Quebec stronghold and the Macassa mine in Kirkland Lake, Ont. So it’s within the realm of the possible that an El Indio divestiture could follow Royal Oak’s takeover.

At this point, however, this is just speculation. We don’t know yet how Lac’s senior management will react; nor can we be sure how Lac’s investors view the offer.

But one thing is certain: No matter the outcome of the Lac bid, Witte comes out a winner.