Dumagami shareholder vows to fight Agnico share swap

Under the terms of the proposed merger involving Toronto-based Agnico and its 43%-owned affiliate, Dumagami shareholders are expected to be offered 1.7 Agnico shares for each share of Dumagami.

The merger plan has already been approved by the boards of both Agnico and Dumagami and a prospectus outlining the terms of an amalgamation is exp ected to be mailed to shareholders soon.

But Forget’s opposition to the amalgamation, he says, is based on Dumagami’s results for the nine months ended June 30. In that time, the company pr oduced 60, 699 oz gold and 99,832 oz silver and more than one million lbs copper at the Don ald LaRonde mine near Cadillac, Que.

Operating costs at the Dumagami mine, which went into production last October, averaged $356(C) per oz gold, during the nine months ended June 30.

By contrast, Agnico’s Telbel mine in Joutel, Que. produced 33,809 oz gold in the first six months of 1988, up from 30,869 a year ago. Agnico’s avera ge cost pe r oz was around $386.

At the current rate of production, Dumagami’s Donald LaRonde should produce a round 90,000 oz gold by year-end, compared with the 70,000 oz expected at Agnico ‘s Telbel.

The average grade of ore mined from Donald LaRonde is expected to increase significantly from 0.153 oz gold per ton when a new hoist designed to a ccess the hi gher grade material is completed this month.

Forget says he isn’t planning to wage a proxy war for a 2.5 Dumagami for one Agnico share swap. Instead, he says, a petition will be filed with the Quebec Su perior Court in Montreal when the merger is completed.

But Agnico spokesman Barry Landen expressed little concern when reached at the company’s Toronto office. “He (Forget) can make all the hay he wants,” said Lan den.

Meanwhile, Dumagami reported third-quarter net income of $1.1 million or 11/7d h/ per share. On June 30, shareholders’ equity stood at $44.8 million with 9.4 m illion common shares issued.

More recently Dumagami shares were trading on the Toronto Stock Exchange at $14.38 in a 52-week range of $9.38-15.50. At press time Agnico shares w ere trading at $9.63 in a range of $8.38-15.

]]>