Yamana takeover best option, but 'mixed feelings' remain


While Graf said he doesn't think gold companies in general want to get into bidding wars these days, given the quality of the asset - widely recognized as top of its class grade wise - Cerro Moro "must be" attractive for operators already in Argentina that are taking a longer term view of issues there, perhaps, for example, AngloGold and Goldcorp.

"You got to think they're taking a look at it," Graf speculated, referring to AngloGold.

Part of Graf's rationale on the potential for new bidders is price. He values Extorre closer to C$11 per share. And so: "The price (of Yamana's offer) is such and the project is such we could get other bidders."

The Cerro Moro project also makes sense for operators in Argentina because of those protectionist rules now making it harder to move cash out of the country. Cerro Moro could offer an avenue to grow production by using cash already in the country (just what Argentina wants) and then these companies could also exploit synergies with existing operations.

Of course this is just speculation. Neither AngloGold nor Goldorp could be reached for comment on whether they had ruled out bids for Extorre as of presstime.

Though Simpson would not speculate and Extorre is hamstrung by a definitive agreement with Yamana - it can't run after other suitors now - he was willing to say on the question of additional bidders that in the "broader perspective, there are a whole number of producers that are well up on the project." As is normal business practise for advanced projects, Extorre has signed confidentiality agreements with other companies so they can take a look into the guts of Cerro Moro.