Pezim’s Prime example of new-found power

A new force has arrived on the Vancouver mining scene, one which has already challenged a takeover attempt by a large U.S. major for an emerging B.C. gold producer.

Prime Capital (through Pezgold Resource Corp.) has gone one round with Homestake Mining already and hopes to win a unanimous decision from regulatory authorities and shareholders in its control battle for North American Metals.

Another Prime Group company, Colossus Resources Equities (see separate story), has made a takeover bid for Delaware Resource Corp. whose snip project near Stewart, B.C., appears to be a viable gold producer. Not that long ago, junior companies with production potential were easy marks for majors but this simply isn’t the case today.

Prime was formed specifically to rationalize the diverse corporate holdings of mining promoter Murray Pezim and his close associate Arthur Clemiss. (At one point, Pezim alone was reported to be a director of about 80 public companies so the rationalization was probably long overdue.) They each hold a one- third interest in Prime which has been described both as a hold ing company and a merchant bank (either description probably fits). International Corona Resources, which Pezim founded but later lost control of, holds the remaining interest.

Pezim managed to lure John Ivany away from Noranda subsidiary Hemlo Gold Mines, where he was president and chief executive officer. Ivany has taken a similar position with Prime and has been commuting between Toronto and Vancouver before taking up permanent residence here.

Discussing his plans for Prime with The Northern Miner, Ivany said he hopes to improve on what Bruce McDonald did with Noramco Mining. (For starters, Prime has hired Noramco’s chief financial officer, Robert Gayton, and Norman Keevil Jr, a Noramco director, will be joining Prime’s board.) Ivany conceded that “in a sense Prime is in competition with Noramco,” but he said the real difference will be in the “execution of their business strategies.” Even so, Ivany expects that Prime “will have a window on junior companies that few majors have.”

Although Prime is relatively cash poor, Ivany noted that Prime has assets of $100 million, mostly stock in Galveston Resources, a major shareholder in International Corona. And he believes the stock will be worth a lot more when the Supreme Court rules on an earlier decision which gave Lac Minerals’ Williams property to International Corona.

He confirmed that Prime intends to raise $50-$100 million eventually through a public issue in which International Corona would likely participate. But as an interim measure, Prime is also raising money on a private placement basis. Unlike Noramco, Prime’s strategy will be towards raising straight equity, much of which will be allocated to the western U.S. “We are certainly not going to be tied to flow- through,” he said.

Prime currently manages 25-30 companies and the group’s 1988 exploration budget will be approximately $30 million. Acting as an umbrella organization Prime not only provides management services, it also helps raise money for exploration work and directs programs.

“We have four geologists on staff full time and a network of consultants who like to deal with us because they get a share position,” he said. Prime also assists in promotional activities which ideally would be reflected in higher prices and greater market liquidity for their shares. Ivany attributed that market liquidity to Pezim’s “wide distribution network,” something that few people would argue with.

Claiming that Pezim is “a survivor,” Ivany concluded that while there used to be “a lot of good promoters around, there aren’t too many now.” In his view, Pezim’s difficulties with public companies in the past were largely management-related. Indeed, this was one of the reasons why he lost control of International Corona, he said. Ivany and Lawrence Page will play leading roles in the management of Prime Capital and Chet Idziszek will look after the company’s exploration subsidiary, Prime Explorations.

The Grew Creek property near Faro, Yukon, in which Golden Nevada Resources has a 50% interest (N.M., Mar 21/88), represents Prime’s best project at the moment and Ivany said: “It’s the closest we have to production.” Prime also has ground in Nevada’s Carlin belt and controls Destiny Resources which has reported encouraging results from its gold property in the Timmins area.

“We hope to generate producing mines within five years and move these up into the parent,” said Ivany. “Then we will have operating income and a significant control position in other companies.”