Andean Resources jumps 10 pct on bidding war talk-UPDATE 2

Trade the News

Tuesday September 07, 2010 05:37:07 AM GMT

* Sydney shares rise a 10th; up over 40 percent in 2 days

* Rivals may top Goldcorp's C$3.6 bln agreed offer - analysts

* AngloGold Ashanti, Yamana Gold seen as potential bidders

* Andean reserves could rise 50-70 pct-analysts (Adds closing share price in Sydney)

SYDNEY, Sept 6 (Reuters) - Shares in Andean Resources, the target of a C$3.6 billion ($3.5 billion) takeover, jumped a tenth in Sydney trading on Monday as talk of bigger gold resources at the Argentina-focused miner raised hopes of higher bid.

Eldorado Gold Corp, which saw its C$3.4 billion all-share offer trumped by an agreed deal from Goldcorp on Friday, could attempt a higher bid, analysts said.

Yamana Gold, and AngloGold Ashanti, which also runs a mine in Argentina, were also tipped to be having a close look at Andean.

"There is a good chance more Canadians will go for Andean. The thought is its actual reserves are much higher than proven reserves," said Tom Elliot, managing director at hedge fund MM&E Capital. MM&E takes stakes in M&A situations.

On Friday, Andean, which counts the Cerro Negro Gold project in the southern province of Santa Cruz in Argentina as its principal asset, agreed with Goldcorp to be taken over.

Analysts said Andean has recently made several significant discoveries that have the potential to lift its resource base by 50 to 70 percent.

"Ultimately, in our view the project could host over 10 million ounces, then Goldcorp will have appeared to have acquired Andean very cheaply," UBS analyst Jo Battershill said.

GOLD FEVER

The deal adds to a series of gold mining acquisitions this year including Australia's Newcrest Mining's $8.4 billion purchase of rival Lihir Gold and Canada's Kinross $7.1 billion stock bid for Red Back Mining.

Near-record prices for the metal are boosting the hunt for reserves and pumping cash into the sector.

Andean shares closed 9.4 percent higher at A$7.0 after having risen as much as 12.3 percent. With Monday's move, the shares have risen more than 40 percent in the last two sessions.

Under the deal agreed with Goldcorp, Andean shareholders will get cash and shares offer worth C$6.50 a share, compared with an all-share bid from Eldorado worth C$6.36 a share.

A transaction is expected to close in late 2010 or early 2011 and Andean's project is expected to begin production in late 2012. ($1=1.039 Canadian Dollar) (Reporting by Narayanan Somasundaram & Sonali Paul; Editing by Ed Davies and Lincoln Feast)

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