Forget’s tactics rile Audrey, brokers

Audrey Resources (TSE) President Guy Hebert will resume discussions this week with representatives of Minnova (TSE) over development plans for the Mobrun polymetallic mine near Rouyn-Noranda, Que.

Hebert says the two companies have agreed in principle to continue exploration on the property while starting a work program designed to develop the upper portion of Mobrun’s new 1100 massive sulphide lens. Under a proposal that would be much less costly than the one tabled last fall after Minnova had completed a mine feasibility study and earned 50% of the 1100, operator Audrey would extend the existing shaft by 200 metres. Drill crews would also continue exploration on the 1100 and newly discovered C lens from Mobrun’s 480-metre level.

In return, Minnova would receive production royalties until metal prices improve and the joint venture reconsiders a $90-million expansion program designed to expand production to 3,000 tons (2,727 tonnes) from 1,400 tons (1,272 tonnes) per day.

Coined the “no frills” mine plan by Richardson Greenshields of Toronto analyst Raymond Goldie, the new proposal would cost about $20 million, and render Audrey’s recent efforts to find outside financial help unnecessary. While Hebert is rumored to have had discussions with Billiton Minerals Canada (a subsidiary of Royal Dutch Shell) regarding the possible sale of Audrey’s stake in Mobrun, Hebert says Audrey has received no formal offers. He says the absence of any formal offer makes it unnecessary for him to comply with a minority shareholders’ request that Audrey reveal the nature of alleged bids for the Mobrun mine assets.

A recent threat by minority shareholder Jacques Forget to obtain a court injunction forcing Audrey to reveal the names of bidders has angered brokers in the Rouyn-Noranda region. They say Forget, who owns 3% of Audrey through his Montreal investment firm Invesfor, is only creating confusion in the marketplace.

In a press release issued by Invesfor, Forget accuses Audrey management of making contradictory announcements regarding the negotiations and driving the share price down to $2.05 from its $4.10 high point.

But Robert Gendron, manager at Levesque Beaubien’s Rouyn-Noranda branch, says the recent drop in price was sparked by investors who bought their shares on credit and then sold out to narrow the margin between the amount borrowed to pay for the shares and reduced value of their holdings.

In an interview with The Northern Miner Forget said that having paid an average of $3.50 per share for Invesfor’s original investment in Audrey, he too was forced to sell on margin.

Having bought the shares in the hope that an Audrey takeover bid would enable him to sell out at a premium, Forget now expects to take a loss on the approximately 400,000 shares Invesfor still holds.

Meanwhile, Audrey has reported a second-quarter profit of $486,000 or three cents per share, compared to a loss of $1.1 million or seven cents a share in the equivalent period last year. Revenues for the three months ended June 30 climbed marginally to $10.7 million from $10.5 million in the year-ago period. During the second quarter, Audrey produced 2.1 million lb. copper, 6.5 million lb. zinc, 5,369 oz. gold and 27,890 oz. silver. That brings production for the year to date 3.8 million lb. copper, 12.1 million lb. zinc, 10,901 oz. gold and 53,593 oz. silver.

Second-quarter, operating costs at Mobrun fell in the quarter to $29.32 per ton from $37.97 last year.