Bid summary,Why has it has come about?See, slide 7, gold price...

Bid summary,

Why has it has come about?

See, slide 7, gold price aside, size and grade are king.

http://www.asx.com.au/asxpdf/20100507/pdf/31q6zvbql8k2y7.pdf

Plus, the majors need to replace 5-10 Moz of gold per year just to balance, not grow.....their production reserves ratio and importantly adding lower cost ounces.

GoldCorp (GG) bid is ~US$3.5B.

AND's indicated and inferred resources are 3.5 Moz Aueq.

So GG is paying ~US$1000/oz Aueq for I&I, although upgrades near term pushing this figure towards 5 Moz is likely.

On an NPV basis from the BFS analysis at current gold prices the project has on NPV (5% disc.) of ~US$800M. On an NPV basis GG is paying a ~440% premium.

On NPV and EV/oz GG are paying healthy premiums to typical takeovers with their current bid. Its clear that Andeans market cap was already supporting high EV/oz ratios from the expectation of finding more high grade gold and silver and GG are paying for this potential future value.

Another bid is possible but would likely come from companies with larger guns (and higher cash costs) than GG, so NEM or ABX. The question is, how much future value will be placed on AND by its suitors for a possible 10, 15, +20 Moz district in today's market?