Hayes awaits court approval for share distrubtion plan

Under the plan of arrangement, Hayes will distribute to its shareholders common shares of the company’s 62%-owned affiliate LynnGold Resources (TSE).

Acquired last year from Sherritt Gordon Mines (TSE), SherrGold’s chief asset is the MacLellan gold mine which produced 55,188 oz gold in 1988 at a cost of $420(C) per oz. Near Lynn Lake, Man., the mine has undergone some significant changes in the past year as the work force attempted to reduce 1987 operating costs of $586(C) per oz.

At Hayes’ recent annual meeting in Toronto, shareholders voted unanimously in favor of a share exchange agreement under which they will receive .306 common shares of LynnGold for each common share of Hayes.

As part of the arrangement, in which 81% of Hayes common shares are being exchanged, the common shares of Hayes still outstanding after the transaction will be re-designated as class A voting shares. Hayes will also change its name to Consolidated Hayes Resources.

For the year ended Dec 31, Hayes reported a net loss of $2.62 million or 8 cents per share compared to $1.86 million or 27 cents per share at the same time a year earlier. At year-end, Hayes was also saddled with over $43.3 million in long-term debt.

However, the company is planning to wipe out a deficit of more than $5.1 million by re-allocating a portion of stated capital.

“In terms of the company’s retained earnings position, it will start out clean with net assets of about $3 million and $1.5 million in working capital,” said George Faught, Hayes’ vice-president finance.

Toronto-based American Barrick Resources (TSE) and DCC Equities hold 50% of Hayes’s 35.2 million outstanding shares.

The company’s other assets include a 50% stake in a 13,000-acre gold exploration property on Nevada’s Carlin gold trend. Operator Cornucopia Resources (TSE), which holds the other 50%, has completed about 6,000 ft of drilling. Nothing of any economic significance has been found, Faught told The Northern Miner.

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