M.I.M. completes share purchase in Granges

The $50-million private placement was made through a wholly- owned subsidiary, M.I.M Canada, just hours after Granges’ shareholders approved the transaction. The company’s name was subsequently changed from Granges Exploration to Granges Inc. (TSE) to better reflect its diversity and more mature status as a producer.

The Granges/M.I.M. alliance is viewed positively on both sides. Colin Kaiser, the newly-appointed chief operating officer of Granges, confirmed the commitment of the M.I.M. group to the growth and development of Granges and said he looked forward to a “long and mutually satisfactory association.”

Mike Muzylowski, president and chief executive officer of Granges since its inception, said the new “mining partnership” would provide significant benefits for the company, its shareholders and employees.

With one benefit being a sizeable cash infusion to its treasury, Granges intends to elevate its profile in acquisitions, maintain a strong hand in exploration, and build up expertise in the areas of development and production.

“We intend to grow significantly in North America over the next two years,” said Muzylowski, noting that low gold prices and depressed market conditions have set the stage for a new emphasis on acquisitions.

“With M.I.M. as our partner we should be able to look at a number of opportunities as they come along, no matter what the price tag,” he said, hinting that one or two are already in the works.

“We think it’s a good deal for both companies,” Muzylowski added. “It gives M.I.M. a catapult right into the North American scene in an active way.”

M.I.M. currently holds an indirect interest in Cominco.

Granges also plans to spend about $10 million on exploration in Canada each year. The company has a large exploration portfolio covering about 900,000 acres in North America. A key project is the Mishi gold project in the Mishibishu Lake region of Ontario, now at the pre-feasibility stage.

“We intend to still do what we do best,” said Muzylowski, adding that the company will continue to focus its exploration efforts on both base and precious metals projects in Canada and in the southwestern United States where it has heap leach gold mining operations.

“We are a metals company with about 40% of our cash flow from copper and zinc,” said Muzylowski, referring to the company’s interest in the polymetallic Trout Lake mine in Manitoba. “This wasn’t a bad experience for us in the past; in fact it saw us through some lean times.” (Granges recently increased its interest in the Trout Lake mine to 29%, however the company is facing a lawsuit by a Toronto investment firm which alleges it had prior rights to buy the 9.167% interest recently acquired by Granges from Out okumpu of Finland.)

Building up “bench strength” in development and production is an equally important priority, Muzylowski emphasized, and one in which the company intends to draw on its association with the M.I.M. organization.

Granges, like many other new producers, ran into its share of start-up problems at its new gold mines, particularly the joint ventured (with Abermin Ltd.) Tartan Lake mine in Manitoba.

“We put three mines into production in one year and we were stretched very thin,” concedes Muzylowski. “1988 was a very difficult year for us but we are now in a position to build up strength in all areas.”

Muzylowski also emphasized that one of the main benefits of the recent transaction to Granges will be the operating expertise of its new chief operating officer, Colin Kaiser, as well as the expertise of others in the M.I.M. group. But Muzylowski stressed that Granges will still operate with considerable independence. “We won’t be dancing on a corporate string,” he said.

M.I.M. is best known in Canada for its part in the consortium led by Teck Corp. that acquired Cominco Ltd., however it is moving to shed its holding company image by becoming increasingly active in mining and mineral exploration worldwide, as well as in Australia. The company produces copper and other base metals, coal and gold.

Muzylowski said the two companies have planned an exchange program whereby personnel from the two companies would visit each other’s operations.

As reported (N.M., June 5/89), dissenting shareholders of Granges scuttled a proposed merger between Granges and Goldbelt Mines (VSE) that was to have preceded the M.I.M. purchase. Muzylowski said a merger still might be possible sometime in the future.

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