Muscocho group unveils merger plans

The Muscocho group of companies, which have never fully recovered from their brush with insolvency in the late 1980s, have agreed to merge.

A new company, named Golden Goose Resources, will emerge from the amalgamation of debt-ridden Muscocho Explorations (MUS-T), Flanagan McAdam Resources (FMRI-C) and McNellen Resources (MNR-T).

Under the plan of arrangement, Muscocho will consolidate its stock on a 1-for-4 basis and change its name to Golden Goose. Shareholders of McNellen will receive one Golden Goose share for every 22.75 McNellen shares, while Flanagan shareholders will recieve one Golden Goose share for every 18.4 Flanagan shares.

The companies’ creditors, who are owed about $12 million, will convert their debt into 3.4 million shares of Golden Goose.

Bharti Laamanen Mining (BLM), a wholly owned subsidiary of William Resources (WIM-T), has also agreed to acquire 1.7 million shares at $1.20 per share and provide management services and technical support.

Golden Goose will use procceds of the financing to explore and develop the Magino and Magnacon gold mine properties, near Wawa, Ont. Developed in the 1980s, both mines were plagued by startup and operating problems that eventually overwhelmed the Muscocho group.

Although the mill on the Magnacon property was recently sold to River Gold Mines (RIV-T), Golden Goose will have the right to process up to 106,000 tonnes of ore per year through the mill.

Following the merger, existing shareholders of Muscocho, McNellen and Flanagan will hold 71% of Golden Goose. BLM will have the option to invest up to a further $8 million in $2-million instalments at prices of $1.60-2.20 per share.

The plan of arrangement is subject to shareholder approval at meetings scheduled for Aug. 22 and 23. Regulatory approval is also required.