Effects of 1989 restructurings kick in as 1990 gets under way

As a new decade gets under way, it is certain that last year’s wave of mergers, acquisitions and corporate restructuring efforts will begin to take effect on a number of mining companies.

The mining industry saw its fair share of asset shuffling, divestment and corporate reorganization activity last year as firms positioned themselves for the 1990s.

Many of the impressive corporate changes that took place involved major mining companies and billions of dollars worth of assets.

For example, at least three major oil and gas producing companies shed their non-core mineral property assets and, as a result, left more than one mining company richer.

The London-based metals giant RTZ, in a landmark US$4.27- billion takeover deal, bought the mining assets of British Petroleum held by subsidiary BP Minerals, excluding those of BP Canada (TSE).

Geographically, more than half (or about 54%) of RTZ’s mining assets are now in North America, including interests in several gold mines such as the Rawhide, Alligator Ridge and Cortez mines in Nevada, and the Ridgeway gold mine in South Carolina. As a result of the BP Minerals acquisition, RTZ will produce more than one million ounces of gold this year.

Also, Imperial Oil sold its mineral property assets, held through Esso Minerals, to Homestake Mining, while Gulf Canada announced an agreement to sell its mining arm, held through Asamera Minerals (TSE), to Toronto-based Corona (TSE).

Canadian resource giant Noranda (TSE) and Sweden’s Trelleborg bought all the shares of nickel miner Falconbridge for $37 per share, while Toronto-based LAC Minerals (TSE) picked up 65% of the outstanding shares of Bond International Gold (TSE) in a deal struck with Australian businessman Alan Bond.

LAC paid $10 per share, or $373.8 million, for the control block in Bond, and could increase its stake even further, analysts say.

Most senior mining companies have been busy buying into junior exploration companies, too, in a trend that shows few signs of slowing in the 1990s.

Gold producer Corona has been keen to increase its stake in the burgeoning Eskay Creek gold camp in northern British Columbia, and recently raised its ownership in Vancouver-based Prime Resources (VSE) to 28.2%. Prime owns 44% of Calpine Resources (VSE) which in turn owns a 50% interest in the promising Eskay Creek gold property held jointly with Stikine Resources (TSE). In addition, Prime has equity interests in nearly 50 juniors, most of them listed on the VSE, known as the Prime group of companies. Meanwhile, Rio Algo m (TSE) picked up an 8.6% stake in the shares of Continental Gold (VSE) which has a 70% interest in the large Mt. Milligan copper-gold deposit.

As part of its corporate strategy to become junior companies’ “partner of choice,” Placer Dome (TSE) has become extremely active acquiring new property interests. It, too, has shed its oil and gas interests.

In the western U.S., as well as across Canada, Placer Dome has started numerous joint ventures with juniors such as Metalore Resources (TSE), Golden Crescent Resources (ASE), American Reserve Mining (VSE), Oneida Resources (VSE), Tundra Gold (VSE) and Athena Gold (VSE).

Vancouver-based Teck (TSE) and Cominco (TSE) have bought into Aur Resources’ promising Louvicourt Twp. base metal discovery, while Noranda has purchased shares of Aur’s partner Societe Miniere Louvem. Cominco has also been buying into Geddes Resources (TSE), which owns the big Windy Craggy copper deposit in northern British Columbia.

Noranda-affiliate Hemlo Gold Mines (TSE) has consolidated and secured its stake in Ontario’s Mishibishu gold camp through joint ventures with Central Crude (TSE) on its Eagle River deposit, and Mishibishu Gold (VSE) on the Pukaskwa River property.

In a recent development, Echo Bay Mines (TSE) recently exchanged its minority ownership of common shares in the Muscocho Explorations (TSE) group of companies for a direct interest in the Magnacon and Magino gold mines near Wawa, Ont.