Crown/Gold Texas shareholders approve merger

The reorganization will see shareholders of the three companies receive stock in a fourth company, New Crown Trading Corp. in exchange for the presently outstanding stock of their respective companies. The name will then be changed to Crown Resources which will be headquarter in Denver.

The companies are now awaiting receipt of approval from the British Columbia Supreme Court which is expected within the next several weeks. Quebec gold producer Malartic Hygrade Gold Mines (VSE), which acquired about 18.9% of the shares of Gold Texas last fall, intends to attend the court hearing to appeal the vote and again present its view that the transaction is “oppressive” to shareholders of all three companies.

Although Malartic Hygrade has stated that a merger of Crown and Gold Texas “on acceptable terms is appropriate,” it has charged that the joint proxy statement and prospectus regarding the merger were “misleading and coercive.”

In an earlier suit since dismissed by the court, Gold Texas had sought to prevent Malartic Hygrade from voting its shares, alleging they were improperly acquired. The two companies had been discussing a business proposal last fall after Malartic Hygrade acquired its initial share position in Gold Texas.

“We listened to their ideas but decided it was not in the best interests of our shareholders to talk to them or to any other company until we had concluded our merger,” said Paul Jones, president of Crown, noting that Gold Texas shareholders voted 78% (75% is needed under British Columbia law) in favor of the reorganization.

After the reorganization, and through its subsidiaries, Crown Resources’ key asset will be a 30% interest in the Kettle River gold project in northeastern Washington. The remaining 70% is owned by partner Echo Bay Mines (TSE) which plans to bring the project into production by early 1990. The project has 3.9 million tons of ore at an average grade of 0.189 oz gold per ton. In its first two years, the mine is expected to produce 110,000 oz at about $175(US), and 85,000 oz in subsequent years at an estimated cash production cost of $196(US) per oz.

Among its consolidated property portfolio, the new company will have a 100% interest in a promising gold skarn project in Washington where a $0.5 million program is planned for this season. Exploration work is also planned for a recently-acquired 34,400-acre project located in southern portion of the Carlin trend in Nevada.

Malartic Hygrade has two gold mines in northwestern Quebec. The company has for some time been seeking additional mines in or near production, in both Canada and the U.S.

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