Hughes-Lang Group plans reorganization

The restructuring plan, prepared with the assistance of Bunting Warburg Inc., will cut costs by reducing the number of companies from 15 to nine and pave the way for a change of direction in the activities of a key company in the group.

But there has also been some speculation that the move is meant to discourage potential takeover bids. Mining entrepreneur Patrick Sheridan, for example, recently increased his stake in one of the companies, New Golden Sceptre Minerals (TSE) to 25%. New Golden Sceptre and other companies in the Hughes-Lang fold have considerable working capital.

Frank Lang and Richard Hughes, founders of the group of companies, are best known for their work in the early development of the Golden Giant orebody at Hemlo which was brought into production by Noranda Inc. (TSE).

In recent years the partners brought into production the Beacon Mine in Val d’Or, Que., which closed after a short and unprofitable production run. Since then, and also partly reflecting the market downturn, the share prices of most companies in the group have fallen to record lows.

Under the proposal, Hughes Lang Corp. (a private company with investments in a number of companies in the group) will amalgamate with Meridor Resources (VSE), New Goliath Minerals (TSE) and New Golden Sceptre. As part of the arrangement, Hughes Lang Corp. will also acquire the core assets of two private companies currently providing management services to the group.

David Hall, vice-president of finance for the group, will become president of the new Hughes Lang Corporation, with Hughes and Lang remaining as co-chairmen. The plan also calls for the recruiting of additional outside directors and management personnel and a shift in emphasis to mining property acquisition, development and operations.

“We do not intend to fund grass roots exploration from within the Hughes Lang Corporation,” noted Richard Hughes.

The exploration focus will be provided by two new juniors formed by the amalgamation of other companies in the group. Eastern Mines (VSE), Gallant Gold Mines (VSE), Silver Sceptre Resources (VSE) and Standard Gold Mines (VSE) will form one exploration company, while Gabriel Resources (VSE), Kangeld Resources (VSE) and Lockwood Petroleum (VSE) will form the other.

A number of other companies will remain as is, including Aurizon Mines (TSE) which owns the Sleeping Giant mine near Amos, Que., and the Beacon mill where custom milling contracts have been arranged.

Share exchange ratios will be based on a geological assessment of the various mineral holdings, together with the companies share price. To facilitate the reorganization, inter-listed companies will be delisted from the Toronto Stock Exchange and the Montreal Exchange.

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