Shareholders give nod to Corona restructuring proposal

Shareholders of International Corona (TSE) voted overwhelmingly in favor of a controversial proposal to become a pure gold mining company by transferring its non-gold assets into a new public company, Dundee Bancorp.

Dundee Bancorp will own about 30% of Corona, and have about 28% of the vote, which effectively means control of the pure gold company will remain in the hands of Corona architect Ned Goodman and his associates. The proposal was approved by 91% of all classes of shares (a two-thirds majority was required) and by about 83% of shareholders after excluding the votes of Corona’s directors and officers.

Rob McEwan of Goldcorp Investments had sought to have the meeting adjourned before the vote was taken so that an amended proxy circular outlining new developments — such as Corona’s recent agreement with Placer Dome for development of Eskay Creek — could be sent to shareholders. The motion was ruled out of order and dismissed.

Once the restructuring is complete, Corona intends to modify its board of directors so that only three Dundee Bancorp representatives will be on the 12-member Corona board: Goodman, Paul Carroll and Myron Gottlieb. Norman Anderson will remain chairman of Corona and Peter Steen will remain as president and chief executive officer. William James, president of Denison Mines, will join the board and two current Corona directors, Peter Cole and Timothy Hoare, will resign.

The Corona restructuring proposal has been controversial, and a number of new developments were announced in the days leading up to the Oct. 9 meeting here. Shareholders expressed concern about the liquidity of Dundee Bancorp shares, and as a result, Corona said Dundee Bancorp was asked to consider an issuer bid to repurchase up to 7 million Dundee Bancorp shares in exchange for up to 7 million new common shares of Corona. These shares would be from among those which Dundee Bancorp will own after the restructuring.

Dundee Bancorp intends to make an issuer bid “as soon as practicable” after the restructuring becomes effective.

In response to concerns about the shareholders rights plan, Corona also intends to support a review of the appropriateness of the plan by May 31, 1993, about 18 months after the restructuring becomes effective. After the vote, Steen told shareholders the company is expecting a decline in its gold production during the next several years. The company produced 755,000 oz. gold and gold-equivalent in 1990; output is expected to slip to 700,000 oz. this year and to 400,00-500,000 oz. in the next few years. Corona recently closed its Renabie mine in Ontario, which produced about 20,000 oz. gold annually, and the Jolu mine in Saskatchewan which turned out about 15,000-to-20,000 oz. annually. Within the next several years, the Nickel Plate mine in British Columbia and the Santa Fe mine in Nevada are expected to close, and production is expected to slip at the David Bell mine at Hemlo, Ont., because of declining ore grades.

“But we will more than make this up when Eskay Creek comes into play,” Steen said. “Our high-cost gold will be phasing out, and will be replaced by lower-cost production.”