Goldcorp Inc., which is trying to buy rival Osisko Mining Corp in a hostile deal, swung to a fourth-quarter loss on impairment charges and slashed its bullion reserves by 15 per cent because of the deep slump in gold prices.
The more than $1-billion in charges, tax-related losses and other items contributed to a fourth-quarter loss of $1.1-billion or $1.34 per share at Goldcorp. That compared to a profit of $504-million or 62 cents per share in the year-earlier period.
Excluding the charges, Goldcorp earned $74-million or 9 cents per share, down from a profit of $465-million or 57 cents per share in the previous year.
Similarly, other Canadian miners Barrick Gold Corp., Kinross Gold Corp. and Agnico Eagle Mines Ltd., also lowered their reserves and recorded impairment charges on mines.
Goldcorp‘s stock and cash bid is currently on hold until early March due to litigation, which gives Osisko more time to find an alternative.
Goldcorp’s chief executive Chuck Jeannes has been adamant that the company will not raise its bid even though Osisko’s share price is trading at $6.82 per share, higher than his offer of $6.59 at current prices.
“We haven’t seen any additional information that would tell us that there is value that we haven’t accounted for in our bid,” he said in an interview.
Osisko owns one of the largest gold mines in the country, Canadian Malartic, which has 10 million ounces of gold reserves.
Mr. Jeannes said he saw no reason to walk away from the deal. He has been chasing Osisko and its Quebec mine for more than five years.
“Our understanding is that they provided due diligence access to a variety of other companies,” he said.
“That doesn’t seem to make sense that they would not provide due diligence access to the one company that has expressed an interest in transacting with them.”
Mr Jeannes has made numerous trips from Goldcorp’s Vancouver headquarters to Quebec. He said he has spoken to the mayor of Malartic, where the mine is based, and to what he says is a significant number of Osisko shareholders. Mr. Jeannes said his meetings were friendly and the reception positive.
On Thursday, Osisko sent its shareholders a letter urging them not to accept Goldcorp’s offer.