Black Hawk and Granduc Mining sign merger deal

Black Hawk Mining (TSE) and Granduc Mining (TSE) will merge under an agreement that will also clear a large debt from the latter’s books.

Each Granduc share can be traded for one share in the merged company. Black Hawk and Granduc shares currently trade at similar prices.

The two companies are partners in the Keystone open-pit gold operations in the Lynn Lake district of northwestern Manitoba, which Granduc operates. Production from a second open pit at Farley Lake is scheduled to begin this year, and will increase output at the project to 40,000 oz. this year from 28,812 oz. in 1995.

Black Hawk also operates the Redstone nickel mine in northeastern Ontario, where production is currently suspended, and the Bald Mountain copper-gold-silver deposit in Maine, which is due to enter production in 1997.

Granduc is owned 15.3% by Conwest Exploration, and Conwest-controlled Jascan Resources (TSE) owns another 8.1%. The interests have been on the auction block since December 1995, when Conwest merged with Alberta Energy (TSE) and announced it would sell its mining assets.

Black Hawk will also pay off a $7-million Granduc debenture held by Conwest and Jascan. The holders will receive cash and Black Hawk debentures, convertible into shares. Black Hawk plans to issue shares to provide the necessary cash, and completion of the share issue is a condition of the merger.

The merger agreement must still be approved by securities regulators and shareholders of both companies.

Another Conwest mining asset, Consolidated Professor Mines (TSE), will likely be bought by Royal Oak Mines (TSE). Consolidated Professor’s board has recommended that shareholders accept Royal Oak’s offer to purchase all common shares at 80 cents per share. Shareholders have until Feb. 27 to accept the takeover offer.