Dickenson investigates Wharf amalgamation

Toronto-based Dickenson Mines (TSE) is investigating an amalgamation with Wharf Resources (TSE), in which the former currently has a 33% equity interest.

J. O. Kachmar, president of both companies, said at Dickenson’s annual meeting that such a combination would create a corporate entity capable of producing almost 135,000 oz gold per year and with proven and probable ore reserves approaching a gold equivalent of two million oz.

Dickenson, which has a 66% interest in the A. W. White gold mine near Red Lake in northwestern Ontario, earned its 33% interest in Wharf by buying the company’s stock over a period of a few months via the open market. A takeover move by Dickenson of Wharf, which operates a heap-leach gold mine in South Dakota and produced 46,000 oz in 1987, would make the company a subsidiary of Dickenson.

Kachmar said after the meeting a plan of amalgamation could be ready for shareholder approval in two to three months.

The president also said the company “shall continue to seek further growth in precious metal production through investment in gold properties either at the production stage or in a semi-developed phase.” Companies up to the size of Wharf would be considered, he said.

Dickenson, in addition to the White mine, operates the Silvana silver-lead-zinc mine in southern British Columbia and the Havelock Lime Works located near Moncton, N.B. It is also the major shareholder in Kam-Kotia Mines (TSE) with a 42% interest. (Kam- Kotia, in turn, is Dickenson’s major shareholder. See separate story.) Precious metals only

A corporate objective is to turn Dickenson into a pure precious metal company, the president said, indicating that the time may come when the lime works will be sold to Kam-Kotia, which management intends to make into an operating company for selected industrial minerals.

Elected to serve on Dickenson’s board of directors were Kachmar, Roderick Douglas (chairman), James Geddes, Ronald Hicks, James McCartney, George Scott, Ronald Stewart and Arthur White, founder of the mine which bears his name.

Last year Pamour Inc. (TSE) acquired 9.7% of the B shares of Dickenson (Pamour also made a similar acquisition of Kam-Kotia shares) and made noises about seeking representation on the board. The eight people nominated at the Dickenson meeting for the board of directors were elected as presented.

Dickenson recorded a net income of $6.4 million (44 cents per share) in 1987 on revenues of $44.1 million, compared with income of $4.59 million (39 cents per share), after an extraordinary item, on revenues of $35.6 million the year before. Production projections

Last year the White mine produced 63,800 oz gold, with Dickenson claiming 41,600 oz of that total. (Holder of the other 34% of the mine is TSE-listed Cambior Inc.) In 1988, the White mine will turn out a projected 80,000 oz and the Wharf mine, 53,000 oz. Under current arrangements, Dickenson’s share of the total, 133,000 oz, would be equal to about 70,200 oz. Net earnings during the first quarter of 1988 amounted to $508,000 (4 cents per share), compared with $1.2 million (9 cents per share) for the same period last year. Gold production during the quarter, at 14,300 oz, was down from 17,800 oz during the first quarter of 1987, Kachmar said.

At the White mine, where the company is trying to increase the number of underground workplaces to boost production, exploration continues on hangingwall zones discovered several years ago. Kachmar said drilling last year on the 26th level intersected 18.5 ft of 2.43 oz gold per ton, while on the 30th level drilling has outlined about 200 tons per ft (vertical) grading 0.95 oz.