Rio Algom, Teck, planning wind-up of Lornex Mining

An agreement has been concluded between Rio Algom (TSE) and Teck Corp. (TSE) which should see Lornex Mining (VSE) discontinued as a public company.

The tightly held company was incorporated in British Columbia almost 25 years ago to develop the Lornex copper deposit in the Highland Valley. Rio Algom and Teck respectively hold 69.1% and 23.5% of Lornex’s common shares.

When completed, Rio Algom and Teck would each hold a direct interest in the assets and liabilities of Lornex, approximately on a 75%-25% basis respectively. Lornex would eventually be merged with a wholly-owned Rio Algom subsidiary and dissolved. All other Lornex shareholders will have the option of receiving $75 in cash or $75 in 8.5% Redeemable Second Preference Shares of Rio Algom for each Lornex common share held.

A fairness opinion has been provided by ScotiaMcLeod and Pemberton Securities. The $75 price represents a 29% premium over the closing price of Lornex common shares as of Nov 10, 1988, the companies note.

The cash takeover bid will be made jointly by the companies through the Vancouver Stock Exchange. The offer will be for 100% of the common shares held by minority shareholders in Canada but not the United States. It will be made in early December, they anticipate.

Lornex’s main assets consist of a partnership interest in Highland Valley Copper with Cominco and Highmont Mining and a joint venture interest in the Bullmoose coal mine in which Teck holds a substantial interest. Lornex has been essentially a holding company the past few years with Rio Algom providing management services.