Goodman’s mark evident in Royex, Corona shuffle

Espousing a philosophy of flexible strategy, Peter Steen, president and chief executive officer of Royex Gold Mining Corp. explained that Royex has become the flagship of an emerging mining group, anchored by a controlling interest in International Corona Resources.

Speaking to a group of mining analysts in Toronto, Mr Steen conceded to a question that “it did appear that Corona would become the flagship, but that has changed because the environment has changed.” Royex and Corona each hold a 49% stake in each other. “Our strategy is still flexible,” he stressed. “However, we still intend to keep Corona clean because of the lawsuit. But Royex will be the center of the group.”

Mr Steen referred to the Lac Minerals appeal over the Page-Williams gold mine at Hemlo. Corona won ownership of the lucrative mine in a legal battle with Lac. The latter company has appealed the decision, results of which are still being awaited.

The corporate jockeying and sudden change in long-term strategy at Royex all carry the unmistakable mark of Ned Goodman, the chairman of Royex and a director of Corona. In the early 1980s, Mr Goodman, a geologist and investment banker, led Campbell Resources through a period of explosive growth via acquisitions and innovative financings. The rapid developments made Campbell complex, and difficult for mining analysts to follow — complaints which prompted Mr Goodman to bark in a 1984 Institutional Investor interview, “we’re not going to stand still just so those damned analysts can catch up.”

At the Royex meeting, that’s just what most people were trying to do — get a handle on the current changes. Royex, since the beginning of the year, has increased its interest in Corona to 49% from 38%; a move designed to stave off director Murray Pezim. (The Hemlo `Godfather’ has since made up with Corona management).

Also, Royex acquired control of Lacana Mining Corp for $52.3 million and moved its interest in Mascot Gold Mines to Lacana for cash and shares. In a bid to improve working capital, Corona raised $50 million (US) last month in Europe. With $50 million and no apparent need for the cash, the move suggests to many observers that Corona is planning future acquisitions. To this query, Royex’s chief financial officer Theodore Rhenius simply said, “I think you’ll find out in due course.”

Following the restructuring, Royex forecasts gold output of 220,000 oz by 1990. Approximately 115,300 oz will come from the Page- Williams mine. Mascot Gold’s Nickel Plate mine near Hedley, B.C., is expected to produce 160,300 oz next year of which more than 35,000 oz will accrue to Royex. At Hemlo, Ont., Corona plans to produce 64,500 oz this year. Assuming the company retains its interest in the Page-Williams mine, then 1990 gold output is estimated at more than 360,000 oz. Of this 240,000 would be from the Page-Williams mine.

Armed with an exploration budget of more than $28 million this year, the Royex group is looking to additional future gold output from the Jolu project in Saskatchewan and possibly from the shutdown Bralorne mine in B.C. Mr Steen noted that although the Bralorne offered good potential at depth, mining would be high cost.