Explaining why its recently proposed merger with Pegasus Gold (NASDAQ) ended in failure, CoCa Mines (NASDAQ) said in a shareholder’s letter that it also held serious negotiations with USMX Inc. of Denver, Colo., a 34%-owned Pegasus affiliate.
But it concluded that neither proposal served the best interests of CoCa shareholders so it withdrew. Discussions were initiated with Pegasus in late April at which time management was led to believe that they would “play a significant role in the management of the combined companies,” CoCa insisted.
“However, during the process of putting the agreement in writing, it became apparent that CoCa mines management would not play a strong enough role in the combined companies to be advantageous to our shareholders,” it said.
“Our goal was not the sale of the assets of this company without the opportunity for our shareholders to continue to participate in the management of those assets. Had it been so, we would have asked for competitive bids from other companies,” CoCa emphasized.
The company is still exploring merger and acquisition opportunities to boost production to over 100,000 oz gold per year. Gold production is expected to double in 1988 to approximately 55,000- 60,000 oz and management is convinced the higher figure could be met within a year.
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