The potential acquisition of Andean Resources is getting tougher, as the two Canadian firms in the bid go head to head against each other. The two rival Canadian firms, Goldcorp and Eldorado are in a bidding war for the takeover of the Australian firm, Andean Resources Ltd. The bidding war was begun by Eldorado, after it made its initial bid for Andean Resources Ltd pegged at $3.2 billion Friday.

However, Eldorado was trying to forestall Goldcorp that immediately announced its 3.6 billion Canadian dollars bid that had already been agreed upon privately between Andean Resources Ltd and Goldcorp. Andean Resources Ltd controls the valuable Cerro Negro gold project in Argentina. Listed in the Sydney Stock Exchange, Andean Resources experienced a share surge of 31% when the Eldorado offer was made.

However, Goldcorp’s bid is higher than Eldorado’s and values Andean Resources Ltd at the equivalent of A$6.90 per share. The bid is similar to Eldorado’s that is being offered in exchange for the firm’s own stock. According to Goldcorp, its offer had already been approved by its board and Andean’s board and the deal may be concluded by latest, early 2011. Andean Resources Ltd’s Cerro Negro gold prospecting project in Argentina's Pategonian province of Santa Cruz has yielded impressive results, with an estimated 3.1 billion ounces of gold reserves.

In that regard, Goldcorp’s $3.2 billion bid for the Australian firm tramples Eldorado Gold’s offer. Goldcorp Inc is Canada’s biggest gold producer and its superior bid might just see it acquire Andean Resources. In its Friday announcement, Goldcorp said it had agreed to buy the Australian gold mining firm for the $3.2 billion, an amount higher than the rival Eldorado offer.  Goldcorp offer for Andean represents a 35% premium to Andean's last traded price on the Toronto exchange, or 2% more than Eldorado's offer.

As global gold producers try to consolidate with gold prices reaching record prices, the takeover comes soon after Australia's Newcrest Mining finalized a deal on 23rd August to buy rival Lihir Gold for $8.4 billion. Eldorado had offered 0.310 per share for every one of Andean's, valuing each at $6.36 Canadian dollars. Goldcorp's offer was made just hours after the board of Andean rejected Eldorado's bid.

Vancouver-based Eldorado, Canada's fifth-biggest gold producer had yesterday made a bid of 0.310 per share for the Sydney and Toronto listed Andean, after the Perth-based miner had rejected its informal approach last month.

5 Sep 2010.