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Case Analysis of Dickenson Mines


1. Business HistoryDickenson Mines dates to the 1920s. From its inception, the company has been active in North American gold mining operations. Over the years, the company expanded its activities to include silver mining operations. Between the mid1940s and the mid1970s, the fixedprice of gold established in the international monetary system, together with continually rising operational costs, jeopardized the financial viability of the firm. Allowing the price of gold to be established by market levels temporarily improved the company's outlook in the 1970s; however, volatile market conditions, together with a deterioration in the qualitylevel of the company's ore resources soon brought new problems for the company.In an attempt to assure longterm financial health, the firm implemented a diversification strategy, which was based largely on expansion into natural gas extraction through joint venture arrangements. Additionally, the company opted for a restructuring of its mining operations, to enable it to productively process its lowerquality ore base. Changing market conditions in natural gas, and inadequate cost and time estimates for the mining conversion soon had the firm in financial hot water. By 1981, the firm was attempting to stave off bankruptcy.

Dickenson is primarily a precious metals mining company, conducting both ore extraction and ore processing operations. Having sold its interest in Coventures, the firm is not longer able to say that it engages in the oil and gas exploration business.

b. Strategic Objective The company's primary explicit strategic objective is to become a successful hightonnage processor of mediumtolowgrade ore.

The company's primary unstated operational objective is to remain a viable business entity. To accomplish this objective, the firm must avoid bankruptcy.

Dickenson in late1981 was confronted with a...

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