Takeover planned, then denied Pezim loses friends at Corona

Moments after an upbeat, 10-minute video extolling the virtues of Internatonal Corona Resources ended, Vice-chairman Murray Pezim stormed out of the annual meeting vowing to regain control of the company.

Referring to the company as “my child,” he termed the directors’ plans for the company “a nefarious scheme” and heaped abuse on two of the directors as television cameras rolled.

“We shall see who controls this company very soon,” said Mr Pezim. He said he controls more than six million of Corona’s 24.8 million shares, fully diluted, and would buy enough shares on the open market to ensure control.

In the early 1980s Mr Pezim was the largest single shareholder in the company that financed the discovery of and is now a major player in one of the country’s richest gold camps.

When the stock market opened after Mr Pezim stated his intention to take control, Corona stock jumped $2.75 to $38.25 from the close the previous day before falling back to $36.25.

However, Canada Dow Jones says later in the day Mr Pezim retracted his pledge to seek control of Corona. The Northern Miner was unable to confirm that report with Mr Pezim.

Two close associates of Mr Pezim’s were replaced on Corona’s board of directors at the shareholders’ meeting. Just prior to the directors’ election, two names were added to the slate of 11 nominees put forward by management and circulated with the notice of the annual meeting in January.

Apparently the two new nominees were invited to stand for election as directors only days before the meeting. At the meeting, management had prepared ballots in favor of the new directors.

Lawrence Page, a Vancouver lawyer, and Arthur Clemiss were not re-elected while Norman Anderson and William Shaughnessy were elected.

Mr Anderson was chairman and chief executive officer of Cominco until a consortium led by Teck Corp. took control in October, 1986. Mr Anderson said he remains on “very good terms” with Teck. Corona and Teck are equal partners on ventures in the Hemlo area where they operate one gold mine and were awarded another operating mine, potentially the biggest gold mine in Canada, in a 1986 court ruling which is currently under appeal.

Lord Shaughnessy is a Canadian citizen who lives in London, England.

Curiously, Mr Pezim gained more votes than any other director — 400 more. Eight directors who were re-elected and one new director who was included in management’s original slate of 11 nominees received 12,510,717 votes each. Mr Page and Mr Clemiss received 3,555,947 votes while Mr Anderson and Lord Shaughnessy received 8,955,837 votes. Mr Pezim received 12,511,117 votes.

After the results of the election were announced, Mr Pezim stormed out of the hall while shouting insults at some of the directors.

“They’re bums,” he said. “We were shafted.”

Mr Pezim said the new board does not represent shareholders: “That’s my baby, my child. They bloody well stole it.”

After the meeting Corona Chairman Peter Steen, who was specifically excluded from Mr Pezim’s disparaging remarks, said the company has always recognized Mr Pezim’s contribution to the company and to the discovery of the Hemlo gold camp.

Mr Pezim is considered to be largely responsible for financing the early exploration work that led to the Hemlo discovery by Corona in 1980. In fact, Corona’s promotional video refers prominently to Mr Pezim’s role.

Mr Pezim’s stated intention of regaining control of Corona is not being dismissed in the industry, despite his reported denial. If he does control six million shares, it’s a significant share of equity.

Richard Cohen, a mining analyst with Brown, Baldwin Nisker, says that six million shares, however “doesn’t appear to give control.”

“I’ve learned not to underestimate The Pez,” says Mr Cohen referring to Mr Pezim by his well known nickname. He added, however, that it would be an expensive proposition.

There is some speculation, however, that the battle for Corona may not be over. John Ivany, president of Noranda subsidiary Hemlo Gold Mines recently joined the board of Galveston Resources, a company controlled by Mr Pezim.

Mr Ivany says Galveston is designed to be “aggressive in exploration and acquisitions” and said he was invited onto the board because Mr Pezim “expressed an interest in dealing with Hemlo Gold Mines.”

Hemlo Gold Mines, although formed less than four months ago, is already perceived to be one of Canada’s premier gold producing companies because of its main asset, the Golden Giant gold mine at Hemlo.

If any connection does develop between Galveston and Corona it could give Noranda a piece of all production from the Hemlo camp.