Annual gold output 650,000 Royex companies amalgamating

An amalgamation of five companies within the Royex-Corona group will create a Canadian gold- mining firm with annual production of 650,000 oz.

The five companies involved are Royex Gold Mining (TSE), International Corona Resources (TSE), Lacana Mining (TSE), Mascot Gold Mines (TSE) and Galveston Resources (TSE).

Name of the new company and complete details of the amalgamation were not available at presstime.

Three of the companies — Royex, Corona and Galveston — are headed by Ned Goodman as chairman and Peter Steen as president. Both men serve as directors of Lacana, while Steen is chairman of Mascot and Goodman a director.

The new company will be Canada’s second-largest gold producer, behind Placer Dome (TSE), whose mining properties around the world gave it a total output of more than 800,000 oz in 1987.

Amalgamation of the five companies, which have interests in mining properties throughout North America, has been planned for some time. Preventing the move was the court case over ownership of the Williams mine at Hemlo, which was brought into production by Lac Minerals (TSE) but which was awarded to Corona by the Supreme Court of Ontario in 1986. Lac appealed the decision to the Ontario Court of Appeal, and lost. The case is now before the Supreme Court of Canada, which has set Oct 11 as the date of the hearing.

Should the Supreme Court ruling go in Corona’s favor, the company would become a 50% owner of the Williams mine, having already made a deal with Teck Corp. (TSE) to share the property. Corona and Teck are 50/50 owners of the producing David Bell gold mine located next door to the Williams mine.

The 650,000-oz total annual output of the new company includes Corona’s share of production from the Williams mine.

“It dragged on longer than we expected,” Steen said of the court case. “We thought it would be in the best interest of shareholders that we take some action.”

Speaking at the Royex annual meeting earlier this year, Steen said the company was planning a more aggressive stance than in the past and was going to put more emphasis on exploration.

Objectives of the new company, including maximizing shareholder value through participation in low- cost mining operations, are similar to what was planned by Royex, he said. The projected operating cost for the new company is $175(US) per oz of gold.

Galveston, a company formerly headed by west-coast promoter Murray Pezim, currently has a 19-23% interest in Royex. Galveston merged during the latter part of 1987 with Blackbird Resources, a private company controlled by Goodman, Steen and others.

Both Royex and Corona own major blocks of shares in each other. Royex is Lacana’s controlling shareholder, while Lacana has a major interest in Mascot.

Lacana’s property interests run from gold and silver to oil and gas and a mica operation in Quebec.