Wharf Res. drawing attention in Dickenson takeover bid

Corona Corp. (TSE), which has takeover offers on the table for Dickenson and Kam-Kotia, recently reported a purchase of a 7.6% interest of the outstanding shares of Wharf, which operates a heap-leach gold mine in South Dakota.

Dickenson then announced it had acquired additional shares in Wharf, increasing its holdings in the company to 37.12% through ownership of about 6.5 million shares.

Last year Dickenson, the controlling shareholder in Wharf, suspended plans to amalgamate Wharf with itself because of, among other considerations, market conditions.

According to Corona President Peter Steen, Corona has become “the largest outside shareholder in each of Dickenson, Kam-Kotia and Wharf, after deducting the shares held by each of the companies in each other.”

On the purchase of Wharf shares by Corona, Dickenson says it is considering legal action because it considers Corona to be in breach of a confidentiality agreement.

Aside from its obvious draw as a gold producer, Wharf has a part to play in the takeover struggle because of its 7.6% interest in Kam- Kotia. (Dickenson and Kam-Kotia have interlocking ownership.) Wharf output

The Wharf mine turned out 59,500 oz last year at a direct production cost of $175(US) per oz; total output for 1989 is projected to be 71,000 oz. Reserves at the project at the end of 1988 amounted to 25.3 million tons averaging 0.037 oz gold per ton.

There are two companies bidding to take over Dickenson and Kam-Kotia. The first to announce its intentions was Corona, which is offering $7.15 for each Dickenson B share (worth 10 votes each) and $2.50 for each Kam-Kotia common share, and which has indicated its intention to make an offer of similar value ($7.15 or a price equivalent) for the Dickenson A shares (worth one vote each).

The Corona offers, rejected by Dickenson and Kam-Kotia directors, have been extended twice and are now set to expire April 4.

The other bidder is Toronto- based gold fund Goldcorp Investments Ltd., which is offering $9 for each B share, $3 for each Kam- Kotia share and $8.50 for each A share (for up to 50% of the issued A shares).

The Goldcorp offers will expire April 14.

Directors of Dickenson and Kam-Kotia report acceptance of the Goldcorp offers, which would keep the current company managements in place.

While the Goldcorp deal would see the investment firm compensated should higher bids be received, John Kachmar, president of Dickenson and Kam-Kotia, refutes any suggestions management of either of his companies will receive payments because of the Goldcorp offers.

“If Corona wishes to compete for control of Dickenson and Kam- Kotia, the appropriate way is to increase its bids,” Kachmar said.

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