Wharf Resources (TSE), the largest unsecured creditor of United Coin Mines (TSE), says it will fight to have a recent agreement between United Coin and MinVen Gold (TSE) revoked.
Under the agreement, United Coin’s interest in the Golden Reward mine near Lead, South Dakota drops from 66.7% to 46% and MinVen’s increases from 33.3% to 54%. MinVen will acquire the remaining 46% by assuming $17 million of United Coin’s debt, paying MinVen US$1.25 million, and depositing 1.5 million MinVen common shares into United Coin’s treasury.
The cash and shares will be used for general corporate purposes, including settlement with the company’s unsecured creditors. Another three million MinVen shares, with warrants attached, will be issued to United Coin shareholders. MinVen recently traded at 48 cents.
Wharf, which holds 11% of United Coin and is owed about $10 million, believes the agreement is a bad deal for both creditors and shareholders. Wharf says it has been offering United Coin financial assistance to pay off debts and keep its interest in the mine for some time.
The Golden Reward mine, which entered commercial production in July, 1991, is expected to produce about 65,000 oz. gold in 1992.
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