Trend to mergers and acqusitions continues in 1989

Interests in Canadian mining companies were purchased by international mining companies such as Western Mining, Homestake and Giant Resources.

Senior to intermediate mining companies purchased interests in junior gold mining companies. Examples are Hemlo — Viceroy; Homestake — Galactic; Echo Bay — Muscocho; Corona — Breakwater; Inco — High River; Total — Getty; Hemlo — Granges; and Hemlo — Central Crude.

Junior to intermediate mining companies purchased/amalgamated with other juniors/ intermediates. Dickenson — Wharf; Hayes — Sherrgold; Northgate — Campbell; Belmoral — Roddy/Yorbeau; Northgate — Sonora/ABM; Northgate — Audrey; Breakwater — Noramco; Northgate — Neptune; Pegasus — Pioneer; Belmoral — Pacific Trans-Ocean are examples of this type of deal.

Divestitures of mining assets included Esso Canada Resources mining assets; Newmont’s Similco Mines and Sherritt shares; Pamorex (50% interest in Bell Creek); Canamax’s 50% share of the Ketza Mine; Lac’s (1/3 interest in the Stillwater Mine); Cambior 34% share of the Arthur White Mine; Echo Bay’s Nuinsco interest.

Amalgamations of affiliated companies/spin-offs: Examples: Corona Corporation; Sigma — Kiena; Falconbridge Gold; Minven (Brohm — MFC); Rio Algom/Lornex; and Prime Capital.

In 1989, strong merger and acquisition activity is continuing in the mining sector. The following trends are likely in 1989: Continuing acquisitions of junior mining companies or amalgamation of junior minin g companies. Junior mining companies are finding it increasingly difficult to meet their financing requirements while seniors continue to have substantial cash available for investments.

Continuing acquisitions of Canadian mining companies by international mining firms. Australian and South African firms in particular should continue to be aggressive.

Divestitures of mining assets by oil and gas companies or spin-offs of pure mining or pure oil and gas companies. Major corporations are recognizing that they should concentrate on the business they know best.

Increasingly active role by mine financing houses and gold funds in mining transactions, often in a pro-active manner.

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