Silver King Mines Inc. will merge with Pacific Silver Corp. and a second dividend of the two companies will be issued, according to company officials.
The plan will require approval of Silver King and Pacific Silver stockholders.The merger should allow subsequent distribution of the companies' Alta Gold Co. stock to shareholders of the two companies without tax liability, said Dan S. Bushnell, chief executive officer, who said he has had extensive talks with Internal Revenue Service officials.
The dividend authorized by the boards of directors of the two companies will be 3 cents per share to Silver King and 2 cents per share to Pacific Silver stockholders, payable March 30 to stockholders of record March 15.
Alta Gold, a subsidiary of Silver King and Pacific Silver, was formed to own and operate the two companies' gold properties, including the Robinson mine near Ely, Nev.
The mine produces 75,000 ounces of gold a year, with reserves of some 600,000 ounces. The Robinson mine and Alta Gold's Golden Butte mine are now in a joint venture with Echo Bay Mines. Echo Bay placed four properties in the venture. Alta Gold owns 60 percent of the venture and is the operator.
After the merger is completed, the companies' Alta Gold common stock is to be distributed to shareholders of the surviving company. Shareholders will also continue to own stock in the surviving company, which will have cash assets of over $14 million and important mill and base metal mining properties in Nevada, Oregon, Idaho and California.
"We feel the distribution of the Alta Gold stock and the merger of Silver King and Pacific Silver will result in increased market recognition of the value of the companies' gold production and properties," Bushnell said.
"Accomplishing the distribution of Alta Gold shares without tax consequences to the shareholder justifies, we believe, the delay involved in merging the two companies."