text: Wall St speculates about Santa Fe savior. Brendan Intindola 
   NEW YORK 1996-12-06 
   Homestake Mining Co tops Wall Street's list as the most likely white knight buyer for Santa Fe Pacific Gold Corp if Santa Fe rejects unsolicited suitor Newmont Mining Corp. Santa Fe is so far mum on the more than $2 billion stock swap takeover proposal from Newmont, announced Thursday. Wall Street, since the bid, has speculated that any deal between Newmont and Santa Fe would be a " bear hug, " or a reluctantly negotiated agreement where the buyer is not necessarily a friendly suitor. Newmont said the companies have had previous contact, though declined to detail the encounters. Analysts predict Santa Fe will go to the highest bidder, and that if a rival buyer is found, Newmont may not be able to match its offer. They said the Santa Fe deal, which includes desirable Nevada mining territory, would only payoff for Newmont longer term. Newmont, in fact, will not benefit from the Santa Fe acquisition on an earnings basis for at least two years, which also limits its capacity to raise its offer. Any deal, friendly or hostile, would almost assuredly be a stock swap, which is necessary to preserve the tax-free, pooling-of-interest accounting, they said. Analysts and arbitrageurs immediately ruled out Barrick Gold Corp and Bre-X Minerals Ltd as Santa Fe saviors because they are locked in negotiations over their splitting Indonesia's Busang vast gold deposit. Placer Dome Inc too was considered unlikley because it is focusing on geographic expansion in areas that do match Santa Fe's Nevada, South America and Central Asia presence, they said. A Homestake spokesman was not immediately available to comment on speculation that it tops the list. Homestake, based in San Francisco, operates gold mines in the United States, Australia, Chile and Canada. Earnings in 1995 were $0. 22 per share, or $30. 3 million, on revenues of $746. 3 million. Santa Fe is headquartered Albuquerque, N. M. and reported 1995 earnings of $0. 30 per share, or $40 million, on revenues of $350 million. Santa Fe has mining and exploration operations in Nevada, California, Montana, Canada, Brazil, Australia, Chile, Kazakstan, Mexico and Ghana. PaineWebber analyst Marc Cohen said he lowered his rating on Newmont to neutral from attractive today because if Newmont merged with Santa Fe, investors would have to wait until the second half of 1998 to realize earnings accretion. " I think Homestake could come in as a white knight, but how much is someone willing to come in above the Newmont number. One would have to outbid by at least 15 percent, but there is going to be a (Santa Fe) deal with someone, " he said. " Longer term, two to three years out, (a Newmont - Santa Fe deal) is positive, it does all the right things. But in the near-term it is, at worst, neutral, " the analyst added. Newmont proposed to Santa Fe a stock-swap merger at a ratio of 0. 33 Newmont shares for each Santa Fe shares. In Friday New York Stock Exchange trade, Newmonth was off 1/2 to 46-5/8 while Santa Fe added 1/4 to 15-1/8. " Newmont said it wants to discuss a friendly deal with Santa Fe, which is almost always a euphemism for' We have more money in our pocket, ' " said an arb, referring to a possible sweetened bid from Newmont. Two other arbs called Newmont's move a " a 32 cent bid " because there is no formal tender offer, only the proposal letter " mailed " to Santa Fe's board. --Wall Street Desk, 212-859-1734.
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