Corona bids cash for Dickenson

It marks the second time in a little over a year Dickenson has witnessed moves by a gold-mining company toward significant share purchases. Pamour Inc. (TSE) in late 1987 bought 9.9% of the B shares of Dickenson and a similar interest in Kam-Kotia, but despite making noises of further purchases, Pamour never followed through.

If successful, Corona would be able to add a projected 80,000 oz gold for 1989 from Dickenson’s A.W. White mine in northwestern Ontario to its already substantial annual gold output and gain a 34.7% equity position in a heap leach operation in South Dakota set to turn out 70,000 oz this year.

A wholly-owned subsidiary, Corona Minerals, has offered $7.15 per share for the Dickenson B shares and $2.50 per share for the Kam-Kotia shares. The bid is subject to acceptance by holders of not less than 1.45 million B shares and 3.15 million Kam-Kotia shares, not including shares already held by Corona.

Prior to announcing its takeover bid, Corona said it had acquired, through market purchases and private agreements, 1.54 million A shares of Dickenson (15.6% interest) and about 1.3 million Kam- Kotia shares (10.9% interest). Corona also said it holds B shares of Dickenson.

Trading in shares of Corona, Dickenson and Kam-Kotia was halted on the Toronto Stock Exchange in advance of the morning announcement by Corona. At close the previous day, Corona A stood at $8.38, Dickenson A at $5.63, Dickenson B at $6.38 and Kam-Kotia at $2.25.

“Assuming we’re successful with our offers, we anticipate proceeding expeditiously with a plan to acquire all of the A shares of Dickenson as well,” Corona President Peter Steen said.

Dickenson, whose White mine has been in production for 40 years, has not been considered an easy takeover target in the past. Its A shares carry one vote each and its B shares 10 votes each, giving the holders of the B shares greater clout in corporate decision making.

As well, there is a cross-ownership between Dickenson and Kam- Kotia — Dickenson has a 39.7% interest in Kam-Kotia and Kam- Kotia a 46.7% interest in Dickenson through its holdings of B shares. The companies also share common directors.

A spokesman for Dickenson would only say the company is studying the proposal.

Pamour may be one Dickenson shareholder willing to sell its stock in the company. President Adrian Fleming indicated such a move may be in the offing; he said the current price of the Dickenson stock is less than what Pamour paid. “The development is obviously a good one for us,” he said of the Corona offer.

Asked about Pamour selling its Dickenson and Kam-Kotia shares, Fleming said “approaches have been made to certain people” but no deal had yet been made concerning the shareholdings.

Dickenson itself recently called off a merger proposal between itself and Wharf Resources (TSE), which operates the South Dakota heap leach mine mentioned above. Dickenson obtained control of Wharf and that company’s board of directors after making open- market share purchases over a period of months; Dickenson then sought to take over Wharf completely but suspended its plans last November because of market conditions.

In addition to the White mine, Dickenson operates the Silvana silver-lead-zinc mine in British Columbia and the Havelock Lime Works near Moncton, N.B. Kam- Kotia has been a relatively quiet company for years; management has said it intends to turn Kam- Kotia into an operating company for selected industrial minerals.

“The acquisition of Dickenson has strategic importance for Corona not only in the precious metals area but in the important industrial minerals group as well,” Steen said.

Corona, formed in 1988 from five main Royex companies, is a major low-cost North American gold producer with interests in 10 producing mines. Its production for 1989 is projected to be more than 635,000 oz, including output from the Williams mine at Hemlo in northern Ontario. (Corona is awaiting a ruling by the Supreme Court of Canada in an ownership dispute between LAC Minerals and itself over the Williams mine. Corona was awarded the mine in 1986 by a Supreme Court of Ontario judge, a decision LAC appealed.) Corona also has interests in industrial minerals and oil and gas properties.

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