CdA Mines merger proposal gets personal

COEUR d’ALENE — Coeur d’Alene Mines Corp.’s efforts to acquire a Canadian gold producer took a personal twist this week, when the estranged twin brother of Coeur Chairman Dennis Wheeler e-mailed officials at Wheaton River Minerals, warning against a merger.

Pat Wheeler is an outspoken critic of his brother’s management at Coeur d’Alene Mines, a company once led by their grandfather.

“I’ve been in touch with Wheaton River,” Pat Wheeler said Friday. “I’m very concerned about what Coeur will do with this company if they proceed…They have a cash-burn rate that’s astounding.”

Coeur is one of two suitors for Wheaton River, a gold producer based in Vancouver, B.C. Wheaton’s future should be clearer after Tuesday, when the company’s shareholders vote on a competing merger proposal from Iamgold, another Canadian gold miner.

Wheaton’s board has repeatedly rebuffed Coeur’s $2 billion offer of stock and cash, citing the Idaho company’s losses of more than $500 million over the past decade. The board is urging shareholders to approve the alliance with Iamgold.

Coeur, meanwhile, has upped the cash portion of its offer, hoping to convince Wheaton’s shareholders to reject the merger with Iamgold.

In an e-mail to Wheaton’s chief financial officer, Pat Wheeler said: “Since (1986) Dennis has embarked on one catastrophic venture after another. He always tries to hit the ‘home run’ so to speak, and to date has not been successful. (He) would love to get his hands on your production.”

Pat Wheeler is particularly critical of a series of high-cost gold mines purchased by Coeur d’Alene Mines during the 1990s. Environmental problems and losses forced the company to close the mines, and it wrote off millions of dollars in investments. Coeur d’Alene Mines later settled a class action lawsuit with shareholders who claimed that company officials misled them with falsely positive reports about gold operations in New Zealand and Chile.

But the rift between the brothers is also personal. In 1990, Pat Wheeler was fired from Coeur d’Alene Mines for failing a drug test, according to court documents.

Dennis Wheeler could not be reached for comment Friday. However, The Financial Times of London quoted him as saying Wednesday: “Patrick Wheeler is a former employee who was fired for violating a mandatory drug test more than 10 years ago. There’s a restraining order on him to stay away from company offices and myself. I don’t have anything else to say.”

In court documents filed in 2002, Dennis Wheeler said he sought the restraining order because his brother threatened him verbally, and once tampered with his mail during the anthrax scare.

Pat Wheeler denied the allegations, and said he thinks the drug test produced a false positive. “He wanted to get rid of me,” he said.

His contact with his brother is now limited to comments he sends to Coeur d’Alene Mines in his role as a shareholder, Pat Wheeler said.

In recent interviews, Coeur officials have characterized the company as a firm in the midst of a rebound. Coeur hit a low point in 2001, when stock prices dropped below $1 per share. At the time, the company’s independent auditor voiced doubt about Coeur’s ability to continue as a “going concern.” Since then, the firm has reduced its debt by millions of dollars, and raised money for new mines in Alaska and Bolivia.

The company’s stock hit a 52-week high of $7.69 this spring, helped along by higher silver prices. Coeur’s stock closed at $4.23 per share Friday.