Canadians to join gold rush for Ashanti

The $1.5bn (£940m) battle for Ashanti Goldfields is set to heat up further with two Canadian groups, Barrick Resources and Placer Dome, considering bids for the Ghanaian gold miner.

Ashanti agreed a $1.1bn all-share offer from AngloGold, the South African group, but this was topped last week by a $1.4bn bid from Jersey-based Randgold Resources. Lonmin, the UK group which owns 28 per cent of Ashanti, has said it wants to sell out of the company and will accept whatever bid makes that easiest. On Friday night the Ghanaian government, which owns 17 per cent of Ashanti, said: "In principle, any transaction that improves our shares is welcome ... we invite anyone who wants to make an offer."

It is understood Barrick and Placer Dome are working on possible bids. Neither company would comment on its intentions, but a spokesman for Barrick said: "We have a history of growth by acquisitions." A Placer Dome spokeswoman said: "Acquisitions certainly form part of our growth strategy."

Mining analysts say the Toronto-based Barrick is much better placed to make a bid for Ashanti. It has $1bn of free cash on its balance sheet - more than enough to include cash in its offer to please Lonmin, and to fund the high-cost development plans for Ashanti's Obuasi mine. Placer Dome, headquartered in Vancouver, is more financially stretched with net debts of $350m, though it has access to significant extra finance from its banks.

Any rival bidder would have to pay a $15m break fee to AngloGold and around $50m of advisers' fees and share options at Ashanti. Lonmin also holds a $75m bond that would have to be repaid should any deal go through.