By FIONA ROTHERHAM
Macraes Mine owner, Gold and Resource Developments, is to merge next month with the loss-making Australian mining engineering concern Minproc, in which it has a 35 per cent stake.
Minproc shareholders and option holders approved the merger last Friday. Subject to court approval, it will take effect on April
3.
The merger terms are one Gold and Resources convertible redeemable preference share plus 14Ac cash for every two Minproc ordinary shares and 2Ac for every Minproc $A2.50 option held (other than those held by Gold and Resources and its wholly owned subsidiaries).
Company chairman Brettney Fogarty said the merger would help position Gold and Resources as a technology-driven resource business with an annual $A160 million turnover, generating $A25 million to $A30 million profit.
Gold and Resources controversially took over Macraes in late 1998 by swapping convertible notes in itself for shares in NZ's largest gold producer, despite an outcry from Macraes' minority shareholders.
Macraes was literally a gold mine worth plundering by its 35 per cent stakeholder. It had consistent annual operating cash surpluses and around $17 million sitting in the bank. By comparison, Gold and Resources had virtually no operating cash flow and a $A15 million Rothschild loan due for repayment in July this year.
Gold and Resources' only other investment was its stake in Minproc. After racking up large losses in recent years, Minproc returned to profit last year, though it contributed a loss of $A1.2 million to Gold and Resources' December half-year net profit of $A14.2 million.
It was a turnaround from the $A21.6 million 1998 half-year loss, which included a $19.8 million writedown of the company's investment in Macraes before amalgamation.
Macraes contributed $A19.6 million profit to the latest half-year while the company's investment side made a loss of $A3.2 million.
Reflecting the strong overall performance, Gold and Resources is to pay a dividend of 3c a share. The company is dual-listed in New Zealand and Australia.
Production at the North Otago mine is up 33 per cent following the introduction of pressure oxidation while cash costs of production are down 28 per cent. A further 30 per cent lift in production and profit is forecast for this year.
