Pezim out; Corona carries on

With or without Murray Pezim on its executive committee, and notwithstanding a legal challenge by Mr Pezim, International Corona should continue showing good results in its gold-mining activities, two analysts say.

Mr Pezim, until recently, was a vice-president of the company.

“Yes, it will still be pretty solid,” Ron Coll of Midland Doherty said of Corona when asked about Mr Pezim and the loss of his senior posting.

Analyst Jim Perrone of Walwyn Stodgell Cochran Murray concurs. “I don’t think that’s a major blow to Corona,” he told The Northern Miner.

Corona’s board of directors recently confirmed that the positions of vice-chairman held by Mr Pezim and investment counsellor Ned Goodman have not been continued and that the former is no longer a member of the executive committee. Board members disturbed

According to board chairman and company president, Peter Steen, the board was disturbed about statements Mr Pezim made to the media concerning proposed transactions that have not been recommended by Corona’s management nor considered by the Corona board.

Mr Pezim was quoted as saying that management wanted to use funds from a newly acquired subsidiary to boost management’s voting control over Corona.

“The board of directors is keenly aware of its responsibilities under applicable securities’ laws to make timely and accurate disclosure of any material information,” Mr Steen said.

“In that regard, each board member has been specifically reminded that public statements about the company’s affairs should originate from management and reflect the views of the company. Each director has also been reminded that as a director of the company he should act strictly in the best interests of the company.”

The names Murray Pezim and International Corona used to be inseparable; Mr Pezim financed Corona and through it the discovery of the Hemlo gold field in northern Ontario. (Corona has a 50% interest in the Teck-Corona mine at Hemlo). Financial troubles forced Mr Pezim to relinquish control of the firm. Pezim plans moves

Last month Mr Pezim, going public with his tiff with Mr Steen, said he would try to garner enough support among Corona shareholders to force the calling of a special meeting and a change in the board’s makeup.

His latest move is a legal challenge. In a petition filed in the Supreme Court of Ontario, Mr Pezim has asked the court to remove five Corona directors and appoint two of his associates who were recently dropped, reverse the company’s purchase of a control block of shares in Lacana Mining of Toronto, and forbid management from voting Corona shares held by subsidiaries. A court hearing is set for March 9.

“Mr Pezim is essentially claiming that the current board of directors, or at least some of its members, are doing a bad job,” comments Electa Aust of Wood Gundy.

“The example mentioned is the purchase by Royex Gold Mining, Corona’s parent, of a 36% interest in Lacana. Mr Pezim claims this purchase was made to maintain control of Corona and that Royex has put itself in serious financial shape as a result of the debt raised to purchase the Lacana shares.

“Indirectly, this action affects Corona as a major shareholder of Royex. The decision to buy Lacana was made by the Royex board of directors, yet Mr Pezim is demanding the dismissal of Corona’s directors.”

With the removal of Mr Pezim, Corona’s executive committee was reduced in size from five to four members. Appeal-decision awaited

The Teck-Corona mine at Hemlo is one of three such operations in that area, Lac Minerals and Noranda also having sunk shafts. (Pending a judge’s ruling, Corona could take over management of the existing Lac mining operation at Hemlo. A legal dispute resulted in Corona being awarded the property in question; Lac appealed the decision last November, but a ruling has yet to be handed down).

The rich Hemlo find figures to make its producers extremely wealthy, and to this end The Northern Miner asked a couple of analysts for their opinions on what the companies might do with their profitable returns.

“The logical use of profits from mines is to make acquisitions, explore and expand,” Jim Perrone of Walwyn Stodgell said.

He doesn’t believe the profits will be used exclusively to pay off bank loans. “I think the paybacks are very short,” he said.

Ron Coll of Midland Doherty is of a similar opinion. “Companies never seem to have a problem spending their profits,” he said.

And how will they spend their money? “I think they’ll do a bit of both: pay back their loans and invest in new operations,” he said.