Louvem rejects Belmoral offer

An offer by Belmoral Mines to purchase about 6.4 million shares of Louvem Inc. has been rejected by the latter’s board of directors.

Belmoral proposed buying the shares at $3.15 per share, for a total cost of $20 million, which would have given the Toronto- based company control of the Quebec mining firm which is forecasting gold production this year of 28,000 oz.

Furthermore, Belmoral proposed the formation of a new company comprising its Quebec-based assets and those of Louvem, with Belmoral receiving 60% of the capital stock of the new company and Louvem shareholders the other 40%.

In rejecting the Belmoral offer, the Louvem board reports a restructuring of its financial situation is in the works. The company says it wants to pay off its $3.7-million debt to Soquem, pursue the in-depth development of its producing Chimo mine through the sinking of a $6-million shaft extension and utilize its Manitou mill to its full potential. A Louvem subsidiary, Monicor Exploration, is involved in the exploration and development of the parent company’s properties.

Louvem shareholders are to vote Oct 20 on an offer from St. Genevieve Resources to purchase 3,703,704 shares of Louvem at $2.70 per share, for a total cost of $10 million. The St. Genevieve offer has the support of the Louvem board. Louvem has already indicated it will use part of the $10 million to repay its debt to Soquem.

A condition of the Belmoral offer was that Louvem purchase about 3.1 million shares, for approximately $9.7 million, of its own stock now held by Soquem.