Letters to the Editor Alexanders Laing did not reneg’

The right of withdrawal is a statutory right of a purchaser to withdraw for a 2-day period following the receipt of the statement of material facts or prospectus. This right gives the purchaser the opportunity to confirm that the security is the one that he intended to purchase.

I believe I qualify as the pre- eminent expert in this transaction as my firm, Canarim Investment Corporation, ended up the purchaser of these securities.

It is clear that Alexanders Laing & Cruickshank did not “reneg” on this purchase but properly withdrew on a genuine misunderstanding on pricing and timing with the issuer, Prime Resources Corporation.

Further, they withdrew at the earliest possible moment which was Monday, Sept 25, 1989. The issue was done on Friday, Sept 22, 1989, and, because of the time difference, it was 4 p.m. London time. The final pricing of the issue was substantially different from Alexanders Laing’s understanding (largely due to a falling market) and the timing difference made it impossible for Laing to perform.

Neither the issuer, Prime Resources, nor the agent, Canarim Investment Corporation, disagreed with Alexanders Laing’s decision in any way and I believe we both sympathized with their decision and understood it.

Those of us who are familiar with Alexanders Laing’s role in Canadian resource financing know that their word has always been the best, was so in this issue and will be in the future. Their integrity is beyond reproach and the courage they have shown in many adverse conditions is legendary. This was a case of a relatively serious misunderstanding aggravated by the difference in time zones. It was a proper decision and in no way could it be considered a “reneg.”

Your editorial was unjust and without the benefit of all the facts and I’m hopeful that you will display this response to it as prominently as you displayed the editorial. Peter M. Brown Chairman Canarim Investment Corporation — 30 — File: LETTERS:2 Letters to the Editor I was shocked to learn from your editorial “Research Rivalry” (N.M., Oct 2/89) that 12 employees of EMR’s surface mining laboratory have been given pink slips. What a tragedy. It is one of CANMET’s more dynamic and experienced mining research groups working under one roof. If these guys can get the boot, how about the others? Their problem, as I understand it, is the dubious laboratory management.

These gentlemen used to be part of the mining research laboratory (Ottawa) until April, 1982. Located in Calgary, they served the needs of the western Canadian mining industry. Under an EMR rationalization plan, a new laboratory — Coal Research Laboratory (CRL) — was created in April, 1982, exactly at the time when the bottom was falling out of the coal market. These gentlemen then became part of CRL. In 1986 under a second rationalization plan, these gentlemen were moved to Edmonton. The third rationalization has given them the boot. What a joke.

Who says that a mining research laboratory is not needed in western Canada with so much of coal, copper and oilsands with an annual worth of nearly $10 billion? U.A. Wala Calgary, Alta. — 30 — File: LYNNGOLD NT LynnGold Oct 31

Low gold prices and high operating costs have forced LynnGold Resources (TSE) to file a holding proposal designed to stave off unsecured creditors. The company’s financial problems stem from a decision to close its MacLellan gold mine near Lynn Lake, Man., on Nov 6. All the company’s employees received 14 weeks’ notice of termination on July 31. The mine will be placed on care and maintenance with milling continuing for about one month after the closure, the company says.

The failure comes as a blow not only to LynnGold but to the town of Lynn Lake which pegged its hopes on the mine following the closure of the nearby Fox zinc mine several years ago.

According to George Faught, vice-president of finance for LynnGold, the holding proposal is designed to give the company until Dec 15 to secure additional funding to pay off creditors. After that date, creditors would have the legal right to force the company into receivership.

During the MacLellan mine’s short life, it flirted with profitability on only a handful of occasions. Immediately after opening in early 1987, the mine ran into milling, grade and dilution problems. In early 1988, ownership of the mine went to Hayes Resources (TSE) — a company backed by DCC Equities and American Barrick Resources — which purchased Sherritt Gordon’s control block in SherrGold Resources for $17 million. Renamed LynnGold, the new company embarked on a mine rescue plan designed to lower costs by implementing a new mining method and other cost-saving actions.

The program worked, allowing the company to generate a profit of $500,000 or 4 cents per share in 1988. Gold output had increased from 39,624 oz in 1987 to 55,188 oz in 1988 and exploration had added reserves in several zones.

However, falling gold prices eroded the small operating margin and LynnGold slipped back into the red. During the first quarter of this year, the mine was producing gold at $443(C) per oz which essentially eliminated any cash flow for capital expenditures.

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