Tap Capital shifts focus to oil and gas

Toronto-based Tap Capital is continuing with a restructuring plan that will eventually see all of its mining assets sold to focus on its oil and gas businesses. Director Richard Scratch says the company is considering preliminary proposals from a publicly traded mining firm to purchase Tap’s remaining mining assets in exchange for dividend-paying preferred shares. The `tradable’ shares would then be distributed to Tap shareholders.

Over the past year, Tap has been selling its holdings in more than 35 junior mining companies, including Neptune Resources (TSE), All-North Resources (VSE), Equinox Resources (TSE) and La Fosse Platinum (TSE).

Tap’s remaining portfolio of junior mining stocks, currently up for sale, include its 26% stake in American Reserve Mining (ME) as well as a 30% interest in Ekaton Industries and a 20% interest in Stewart Lake Resources (TSE). Scratch says discussions are in progress with a potential buyer and an agreement in principle is expected by Aug. 31.

The final terms and particulars of Tap’s restructuring plan will be announced when an agreement in principle with a buyer for the mining assets is reached, he says. Assuming the asset sale is completed, Tap would then focus on its oil and gas business. Changes to the company’s board of directors would also be made to reflect its new corporate alignment.

Small inefficient gas wells and fields owned by Tap are being sold to further rationalize the company’s business and to reduce debt. Proceeds from ongoing asset dispositions are being deposited in an account earmarked for debt reduction.

Shareholders at the annual meeting approved the redesignation of Tap’s class A subordinate voting shares as “class A shares” which are listed and posted for trading on The Toronto Stock Exchange. Also, management’s slate of six directors was re-elected to the board.