Kiena, Sigma unite into Placer’s Quebec branch

It’s taken almost a year to put in place, but Placer Dome subsidiaries Kiena Gold Mines, and Sigma Mines (Quebec) are to be amalgamated to form a major Quebec mining division of the parent company.

Placer will acquire the 43.3% of Kiena and the 35.3% of Sigma it doesn’t already own, through a share exchange.

Kiena, once called a “jewel” of a gold mine by its former owner, Falconbridge Ltd., this year is expected to produce about 67,000 oz gold, and Sigma about 63,000 oz, to give the new combined operation in Quebec a total output of 130,000 oz.

The merger proposes a share exchange in which Kiena shareholders will receive 0.92 common shares of Placer Dome for each Kiena common share, and Sigma shareholders will receive 0.97 common shares of Placer Dome for each Sigma common share.

John Hick, senior vice-president corporate, and secretary, for Placer Dome, tells The Northern Miner the share exchange, which represents a 15% premium to the minority shareholders of Sigma and Kiena above their average prices during the past 20 days, “is more than fair to shareholders.”

Hick notes that the formation of the new division in Quebec will provide a strong vehicle there, “more of a force, rather than a disjointed force” in that province, enabling, among other things, one combined exploration program this year (with a budget of around $9 million) that will bring a higher probability of growth for the two companies.

Also, he said, because the move will give Placer Dome direct access to cash flow of the two companies, there will no longer be a liquidity problem.

The amalgamation had been considered nearly a year ago, at the time of the Placer Development/ Dome Mines merger. It hadn’t proceeded faster, Hick said, “because quite frankly, it just takes time to go the right way.” Placer Dome, whose over-all gold production is expected to increase by more than one-third to over 1.1 million oz over the next 30 months, says no changes in operations at either the Sigma or Kiena mines will result from the amalgamations. The mines will continue to operate separately.

Sigma had been in the Dome Mines fold for about 50 years, until becoming part of the Placer Dome group in August last year. Dome acquired Kiena from Falconbridge, through Campbell Red Lake Mines, early in 1986.

Shareholders of Kiena and Sigma will vote on the proposed amalgamation at shareholders’ meetings scheduled to be held on or about June 15, Placer Dome says. A favorable vote of at least two-thirds of the shares represented at the meetings will be needed to approve the amalgamations.