Conwest, Alberta Energy plan merger

Oil and gas explorer and producer Alberta Energy announced plans for a buyout of Conwest Exploration (TSE), under which the merged company would sell Conwest’s mining and hydroelectric interests.

Alberta Energy’s bid, announced Dec. 10, offers $28 per share for 40% of Conwest, and an exchange of 1.25 shares of Alberta Energy for each remaining Conwest share. At presstime (Dec. 12), Conwest shares stood at $27 and Alberta Energy at $21.25. From Dec. 8, the last market close before the announcement, Conwest was down $1 and Alberta Energy down $1.62.

The merged company would concentrate on the exploration and production of oil and gas, and offer Conwest’s assets in other businesses for sale. Alberta Energy has already shed its forest-products business and other non-energy assets.

After the merger, Alberta Energy would create a subsidiary to hold Conwest’s mining and hydroelectric assets, as well as debt. Conwest values the assets at around $165 million (about three-quarters of its debt).

The assets could be offered as a package, but Conwest would consider offers on individual holdings. The largest of the assets to be offered is the Nanisivik mine, on the northern coast of Baffin Island, N.W.T. Nanisivik showed an operating profit of $8.1 million for the first nine months of 1994, and its current proven and probable reserves stand at 2.6 million tonnes grading 7.5% zinc and 0.2% lead, plus 35 grams silver per tonne.

The company’s other direct mining interest is the Half Mile Lake property in New Brunswick, optioned to Noranda (TSE). The deposit has a preliminary resource of 5.3 million tonnes averaging 3.25% lead, 10.26% zinc, 0.08% copper and 28.8 grams silver per tonne.

The company also owns 15.3% of Granduc Mining (TSE), 50% owner of the Keystone gold project in northern Manitoba. It holds a 55% interest in Regional Resources (TSE), which has the Midway lead-zinc and Logtung tungsten-molybdenum properties in the Yukon. Conwest also has a 41% shareholding in Consolidated Professor Mines (TSE); Consolidated Professor owns the Shoal Lake gold property in northwestern Ontario, which is now under environmental assessment.

Conwest’s substantial interests in several other junior mining companies are also up for sale, including stakes in Bell Molybdenum Mines (VSE), Highwood Resources (TSE), Jascan Resources (TSE), Chance Mining and Exploration (CDN) and Hucamp Mines (CDN).

In the merger plan, three directors of Conwest — Chairman Martin Connell, President John Lamacraft and director Harley Hotchkiss — would take seats on the Alberta Energy board.