Royex pays $52.3 million for control of Lacana

The purchase of a controlling 36% interest in Lacana Mining Corp. has been completed by Royex Gold Mining Corp. Representing 4.7 million Lacana shares, the control block was purchased from Westmin Resources for $52.3 million or $11 per share.

For Royex, the Lacana purchase provides exposure to another 60,000 oz of gold production from three Nevada-based mines in which Lacana holds varying interests. Company founder and Chairman, Dr William H. Gross said last year that Lacana expected to double its gold production by 1989 through interests in other projects. These include the Sante Fe property, also in Nevada, and the 30%-owned Sulphurets project in B.C. For the nine- month period ended Sept 31, 1986, Lacana realized net earnings of $5.8 million or 49 cents per share on revenues of $26 million. Royex, a company which is the 38% controlling shareholder in International Corona Resources, forecasts go ld production of 110,000 oz this year, increasing to 200,000 in 1988. Both figures do not include the company’s interest in Lacana’s future gold output. International Corona inturn controls Royex via a 49% stake.

Royex is not divulging what it plans to do with its latest acquisition. No operational or personnel changes have been announced. “We’re getting to know them,” a Royex spokeman tells The Northern Miner.

“We expect to continue as a distinct unit — it’s business as usual” Orval E. Leigh, vice president of coporate development at Lacana, says. However, Mr Leigh adds that the deal has just closed and its too early to say whether any major changes are planned. “We`re quite pleased with the people (at Royex). They’re fine people and Peter Steen has a fine reputation,” Mr Leigh says. Peter Steen is president and chief executive officer of Royex.

Commenting on the position of president at Lacana, a post which has remained unoccupied since Edward Thompson left the position in 1985, Mr Leigh says that Royex will have “major input on that position.”

The lack of a president has resulted in the preception amongst mining analysts that Lacana is suffering from weak management. “The Royex deal should provide Lacana with a new sense of direction,” Michael Pickens, a mining analyst with Yorkton Securities says. Mr Pickens notes that although the purchase price of $11 per share “is a little rich,” the combination of good assets at Lacana and strong mangement direction from Royex, bodes well for the company.