Siscoe takes control of Barrick

A share exchange agreement, subject to shareholders’ approval, will transfer control of American Barrick Resources to United Siscoe Mines, a former Barrick subsidiary.

Three companies are tratransfer control of American Barrick Resources to United Siscoe Mines, a former Barrick subsidiary.

Three companies are trading their already-issued shares of Barrick for treasury shares of Siscoe. The final result will give Siscoe a 30% equity share of Barrick while the three companies will end up with 92% of Siscoe. Percentages don’t include the possible issue of 2.36 million Barrick shares to buy Pancana Minerals (N.M., Dec 8 /86).

Siscoe says the purpose of the restructuring is to increase the company’s capital base so it can diversify into other areas such as commercial real estate and high-tech industries as well as mining.

Meanwhile, a Utah-based company has sued Barrick challenging Barrick’s ownership of the Mercur mine in Utah. The Mercur mine is the mainstay in Barrick’s growing fleet of gold mines. Purchased in 1985 for $40 million (US), Mercur produced 85,332 oz of gold in the first nine months of 1986 at a cash cost of $189(US) per oz.

The Utah company, Gold Standard Inc., has also named Getty Oil and Texaco Inc. in its suit. Gold Standard claims that it acquired the property in 1972, then vended it to Getty in 1973. Texaco acquired Getty in 1984 and sold the Mercur mine to Barrick.

Barrick says the claim has no merit. It says Gold Standard holds a “small net profits interest” based on its original agreement with Getty and receives $75,000 a year from Barrick.

“There does not exist nor has there ever existed any other commercial arrangements of any sort between Gold Standard and Barrick,” says Barrick.

Investigations undertaken when Barrick purchased Mercur satisfied it that Gold Standard has no claim to any other interest in the mine other than its net profits interest.

Gold Standard is a mineral exploration company listed on the Pacific Coast Stock Exchange where it trades at about the 50 cents level, says Mr Smith. There are about 9.5 million shares outstanding.

Mr Scott, a geologist, says Gold Standard’s main asset is the Mercur mine although it holds some other exploration properties as well. He said he brought the mine to Barrick’s attention in early 1985.

The suit, filed in the Third Judicial District Court, gives 10 specific causes for the action including bad faith, breach of contract and fiduciary duty, misapropriation of money, unjust enrichment and trespass.

Gold Standard claims damages of $50 million (US) due to unjust enrichment of Barrick, direct damages of more than $274 million and punitive damages of $500 million.

Barrick says the amounts claimed are “frivolous.”

Under the restructuring deal with Siscoe, Barrick Chairman Peter Munk will maintain voting control by holding all multiple voting shares, the multiple voting privileges of which are not transferable. The multiple voting shares give him 15 votes for every share held or 63% of total voting rights in the new company.

Placing voting control with Mr Munk while equity control goes into foreign hands allows the company to avoid certain regulations under the Investment Canada Act.

The three companies involved in the reverse takeover of Siscoe are A.I.C. Ltd., owned by American businessman Anthony Novelly, Killarney Ltd., owned by Prince Nawaf of Saudi Arabia, and Horsham Securities, a private Ontario corporation controlled by Mr Munk. The Kashoggi family of Saudi Arabia will gain an interest in Siscoe through its holdings in Horsham.

At the end of June Siscoe had 3,778,456 million shares outstanding. It will issue 31,201,560 shares for all the outstanding shares of Horsham which owns about 22.5% of Barrick, 10,403,767 to Killarney and A.I.C. for their shares of Barrick. A further 1,752,381 Siscoe treasury shares will be issued to A.I.C. for $4 million (US) in cash.

All share exchanges are based on a price of $20.40 per Barrick share and $3.15 per Siscoe share.

At that point the Siscoe shares will be consolidated on a 3-for-1 basis resulting in 15,712,055 shares being outstanding, 1,616,332 of which will be multiple voting shares.

Siscoe will also be renamed Horsham Corp.

The restructuring is subject to approval by Siscoe shareholders. A shareholders meeting to consider the changes has been called for Dec 30 in Montreal.