FMC Gold to break away from parent

FMC Gold (FGL-N) has been examining ways to separate itself from its parent company FMC Corp.

FMC Gold’s board of directors approved a plan for re-incorporation, which would include a merger with an existing Canadian company. The new entity would be known as Meridian Gold, with a registered office in Vancouver.

After the re-incorporation, FMC Corp. (which owns 80% of FMC Gold) would make a secondary public offering in Canada and Europe, and a private placing in the U.S., of most of its equity interest in Meridian Gold.

Under the terms of the merger agreement, stockholders in FMC Gold would receive one common share of Meridian Gold plus a cash payment of 2 cents per share. Because the transaction would be taxable, FMC Gold stockholders are entitled to an FMC-funded compensatory payment.

The company expects the reorganization could occur in the third quarter of 1996, though it will still continue to review all of its options. The company will hold a special meeting of stockholders on July 23 to approve the merger.

FMC Gold currently holds properties in South America and the U.S.

In northern Chile, it holds the 230-sq.-mile El Penon gold property. With a resource of 1.2 million oz. gold and 28.7 million oz. silver from a vein system starting at the surface, El Penon is believed to have both open-pit and underground potential.

To date, 310 holes have been drilled, and drills are still turning on the property. The vein system, which can reach a width of about 100 ft in true thickness, has been tested to a depth of more than 800 ft. Mineralization is in oxides, and the deposit is open at depth and on strike. The company will begin a prefeasibility study in July.

The company also owns several other properties in Chile.

In the northern part of the Carlin trend of Nevada, FMC Gold owns the Rossi gold property. Mineralization at Rossi is found in 45 intercepts from 22 drill holes in the resource area. The average grade for the mineralization is 0.468 oz. gold per ton.

In Idaho, FMC Gold owns the Beartrack gold mine, which is on schedule and on budget to produce more than 100,000 oz. gold for under US$200 per oz. Ongoing delineation drilling is expected to expand the known reserves.

The company also has a 30% interest in the Jerritt Canyon mine in northeastern Nevada.