Placer Dome sells control of VSM at discount price

Montreal-based junior VSM Exploration (TSE), which has a zinc exploration project near Matagami, Que., has a new controlling shareholder.

Gold producer Cambior (TSE) has purchased a 43.6% interest in VSM for $2 million from a numbered company which acquired a majority interest in VSM from Placer Dome (TSE). Cambior also paid an additional indirect consideration of $500,000 to related parties.

President of the numbered company, 2828090 Canada Inc., is Mario Caron, who also served as president of VSM.

With Cambior in control of VSM, Caron moves to the chairman’s and chief executive officer’s seat, and Raynald Vezina, a Cambior vice-president, becomes president and chief operating officer of VSM.

The numbered company, which acquired Placer’s 53.9% interest (almost 11.5 million shares) in VSM, retains a 10.3% interest in VSM.

Cambior provided financial assistance to the numbered company for the acquisition.

(Caron’s 2828090 Canada paid about 17 cents per share for the 11.5 million shares of VSM; Cambior acquired about 9.3 million shares from the numbered company for about 21.5 cents per share.)

The numbered company says it has agreed to vote its 2.2 million shares (10.3% interest) of VSM in accordance with Cambior’s instructions. Cambior has the right of first refusal on the 2.2 million shares of VSM owned by the numbered company.

Reserves (probable and possible) at the Grevet zinc project stand at 12.7 million tonnes grading 8.95% zinc, 0.5% copper and 36.2 grams silver per tonne. Cambior says it is expected that VSM will undertake an underground exploration program to verify the parameters used in estimating these reserves with a view to bringing the project to the feasibility stage.

The Grevet project is a joint venture between VSM and Serem-Quebec, a French-owned exploration company. VSM and Serem each has a 50% interest in Grevet.

Cambior says the new VSM board has approved an amendment to the Serem agreement which would see VSM acquire an option to earn an additional 20% interest in Grevet (and other exploration properties in Quebec covered by the agreement) by spending $15 million on exploration and development work on the properties and by completing a feasibility study for the Grevet deposit (lenses III, IV and 97) by the end of 1995.

By granting the option, Serem will gain one million shares of VSM. The option agreement is subject to regulatory approval.