The management of Geomaque Explorations (TSE) is asking shareholders to resist attempts by Great Lakes Minerals (TSE) to merge the two companies, telling them their share value would drop as a result.
In a circular sent to shareholders, Geomaque says the merger would sharply dilute its upside potential while the exchange terms would significantly dilute its earnings outlook.
Specifically, Geomaque points out that the capital cost per ounce of gold produced at its San Franciso property is significantly less than the cost incurred by the Grouse Creek mine in Idaho, in which Great Lakes owns a 20% interest.
“It’s just a lot of bunk and propaganda,” Great Lakes Chairman John McBride says of Geomaque’s letter, adding that it carries “misleading” information about his company’s assets.
McBride says Geomaque’s management has provided no sound reasons for resisting the merger. “They rejected the merger [simply because] they were going to lose their jobs. These are all things they’ve conjured up since calling off the negotiations.”
In the letter, Geomaque cites several institutional investors which have expressed their support for the company’s decision to resist the merger. These include Royal Trust Precious Metals Mutual Fund, RoyFund Canadian Growth Fund and Canadian Equity Growth Fund.
Geomaque also announced the nomination to its board of Roland Francisco and Robert McEwen, both of Goldcorp, (TSE) and Edward Thompson, a veteran mining consultant. Meanwhile, Geomaque director Donald Empey has relinquished the titles of chairman and chief financial officer in order to avoid a potential conflict of interest. Empey is on record as being supportive of Great Lakes’ merger proposal.
Geomaque’s annual meeting, postponed as a result of the merger proposal, is now set for June 30 in Montreal.
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