Muscocho mines deal fair to shareholders, firm says

An independent valuation and fairness opinion of a deal involving three Muscocho group companies, two new producing gold mines in northern Ontario and Echo Bay Mines (TSE) concludes the proposed transactions are fair to shareholders, the Muscocho companies report. Investment dealer Nesbitt Thomson Deacon was hired to prepare the opinion. Under the deal announced a few months ago (T.N.M., Jan. 8/90), Echo Bay would become a 50% owner of the Magino mine and a 37.5% owner of the Magnacon mine, and the operator of both.

Shareholders of Flanagan McAdam Resources (TSE) and of McNellen Resources (TSE) will vote April 17 at their separate annual meetings, while shareholders of Muscocho Explorations (TSE) will vote April 18.

Muscocho and McNellen, joint owners of Magino, will each assign a 25% interest in the mine to Echo Bay and in exploration properties in the area of the mine. Muscocho will also transfer 50% of its shareholdings in McMillan Gold Corp. to Echo Bay.

Similarly, Muscocho and Flanagan McAdam, each with a 37.5% interest in the Magnacon, will assign half of their interests in the mine to Echo Bay and in exploration properties in the area of the mine. Flanagan McAdam will also transfer 50% of its shareholdings in McMillan to Echo Bay.

In return, Echo Bay will tender its approximate one-third interest in each of the three companies and provide cash payments and loans.

The mines, in the Wawa area, experienced long startup periods. Low gold prices last year presented the Muscocho group of companies with financial problems.

A challenge to the proposed deal may come from Windarra Minerals (TSE), which has a 25% interest in the Magnacon. Vancouver-based Windarra says it has the right of first refusal to purchase an increased interest in the mining operation. President Ronald Philp, in a prepared release, said management is continuing its review of the proposed ownership and operator change.