Kerr sells stake in Golden Shield

With the sale of a major interest in Golden Shield Resources (TSE), Kerr Addison Mines (TSE) has ended its association with the gold mine in Virginiatown, Ont., on which the company was built.

Last year, Kerr sold the mine and mill complex to Golden Shield for a consideration of $19 million in cash and shares. The shares, warrants and a convertible debenture represent a 28% interest in the junior company on a fully diluted basis. Since beginning operations in 1938, the Kerr mine has produced more than 10 million oz of gold.

The interest in Golden Shield has been resold to DRX Inc., a U.S. company which is controlled by U.K. institutional interests. DRX is paying $12.6 million for the stake, which represents the largest shareholding in Golden Shield.

For Kerr Addison, the proceeds from the sale will be added to a growing mountain of cash and short-term securities, which at year- end exceeded $200 million. “A lot of the things we are looking at are more apt to be in the junior sector,” Kerr President and Chief Executive Officer, Ian Bayer, told the Northern Miner when queried about possible acquisitions. Apart from small purchases of equity in two small juniors, MSV Resources and RFC Resource Finance Corp., Kerr appears to be biding its time.

“We prefer to look at deals where there is no competition,” Bayer explained. “We don’t want to be competing right now.” He conceded that the primary reason is the dearth of good quality projects which are reasonably priced. Although targets are being reviewed internally, no major deals are expected in the near future, he added.