Share prices of Dickenson, Kam-Kotia up sharply after Corona

Prices for the B shares of Dickenson Mines (TSE) and the common shares of Kam-Kotia Mines (TSE) jumped sharply following the announcement of a proposed takeover bid by Corona Corp. (TSE).

At the close of the first day of trading following the announcement by Corona (trading in the shares was halted for one day by the Toronto Stock Exchange), the price of Dickenson’s B stock stood at $7.38, up $1, and the Kam-Kotia stock at $2.58, up 33 cents . Both stocks climbed higher the next day as well, to $7.50 and $2.75, respectively.

The stock prices rose to levels exceeding what Corona is proposing to pay, $7.15 per B share and $2.50 per Kam-Kotia share. Dickenson’s A shares gained 75 cents to close at $6.38 on the first day after trading resumed; the next day the shares closed higher at $6.50.

Some analysts have suggested Corona’s bids for the associated companies may be low, and that another bidder may be waiting in the wings.

The president of Corona, Peter Steen, issued a press release denying he accused Dickenson and Kam- Kotia of “buying shares in each other to push up their share prices” as alleged in a news service story.

Corona, which published its offer a few days after announcing its takeover bid, is proposing an all-cash offer for all of the B shares of Dickenson and common shares of Kam-Kotia. (The Corona takeover bid is officially being made by a wholly-owned subsidiary, Corona Minerals.)

Corona says it has withdrawn the condition that it will purchase offered shares only if a minimum of 1.45 million B shares and 3.15 million Kam-Kotia shares are tendered. Corona says it will accept any and all of the B shares plus any and all of the Kam-Kotia shares tendered.

Pamour Inc. (TSE), Corona says, has agreed to tender the 507,000 B shares (9.7% interest) and the 987,800 Kam-Kotia shares (8.1%) it has held since late 1987.

At the time of the announcement of the takeover bid, Corona held 1.54 million A shares (15.6% interest), 11,000 B shares and 1.3 million Kam-Kotia shares (10.9% interest).

If successful in purchasing the Pamour shareholdings, Corona says it would have a 10.8% voting position in Dickenson and a 19% voting interest in Kam-Kotia. (Dickenson B shares carry 10 votes each, and the A shares one vote each.)

Dickenson and Kam-Kotia share a common president, John Kachmar, and each has a controlling shareholding in the other. (Dickenson has about a 39% interest in Kam-Kotia, while Kam-Kotia has a 16% equity interest — representing a 39% voting interest — in Dickenson.) Dickenson’s main asset is the A.W. White gold mine in the Red Lake area of northwestern Ontario, which produced 70,000 oz gold in 1988 and will turn out a projected 82,000 oz this year. Dickenson also has a 34.7% equity (and controlling) interest in Wharf Resources (TSE), whose heap leach mine in South Dakota produced 59,500 oz last year and is expected to turn out 71,000 oz in 1989. Kam-Kotia, with interests in sodium sulphate operations in Saskatchewan, has had a relatively quiet corporate history the past few years.

Corona is a major low-cost gold producer with interests in 10 producing North American mines, industrial minerals and oil and gas.