RE:RE:I sure dodged the bullet here In April 1988 Echo Bay Mines acquired significant interests in the Muscocho mining group of companies—consisting of Muscocho Explorations Ltd., Flanagan Mc Adam Resources Inc., and McNellan Resources Inc. The deal included the purchase by Echo Bay of C$26.5 million worth of newly issued common shares and C$23.5 million in convertible bonds. Echo Bay agreed not to increase its interests in the group to more than 33% for six years. Muscocho group’s Magino and Magnacon properties in Ontario, and the Montauban mine in Quebec, represented Echo Bay’s first participation in eastern Canadian mines.
The acquisition proved a major disappointment for Echo Bay, however. By mid-1989, Muscocho’s Magino and Magnacon mines were for behind schedule. Echo Bay traded its one-third equity in Muscocho plus some cash and loans for 36% direct ownership of Magnacon and 50% of Magino; and Echo Bay also became the mines’ operator. Although the Muscocho investment was a costly write-down for Echo Bay, the future of the two mines it retained from the deal was bright.