Andaurex eyes Meliadine

Vancouver — Australia’s WMC Resources (WMC-N) has an interested buyer for its 56% stake in the Meliadine West gold property in Nunavut.

Andaurex Industries (AWX-V) and Sakku Investments, a wholly owned subsidiary of the Kivalliq Inuit Association (KIA), have signed a memorandum of understanding that enables them to negotiate the acquisition of WMC’s interest.

Situated 20 km north of Rankin Inlet, Meliadine West hosts six deposits with a total resource of 22.1 million tonnes grading 6.33 grams gold per tonne. WMC spent more than $55 million advancing the project through prefeasibility studies but, in early 2001, announced its intention to divest itself of its stake following a corporate decision to get out of the gold business.

To maintain its interest in the project, WMC must make annual cash payments to its Canadian partners of $1 million at the start of each new year until commercial production has been achieved. The payments escalate to $3 million beginning in 2006. WMC is also required to keep the properties in good standing. The project has been shopped around to every major in the world, but, with a price tag pegged at US$22 million, there have been no takers.

Cumberland Resources (CBD-T) and Comaplex Minerals (CMF-T) each hold a 22% interest in the idle, 4.5-million-oz. property, with both companies carried all the way through to production. The juniors also hold a first right of refusal on the sale of WMC’s interest.

Provided a purchase agreement can be reached, Sakku has the right to exchange its interest in the project for Andaurex shares.

Sakku is a Nunavut-based company formed to manage the investment interests of the KIA, one of three regional birthright organizations formed in the territory. The association is responsible for advancing and protecting Inuit interests in the Kivalliq region under the terms of the Nunavut Land Claim Agreement.

“The mandate of the new company will be to participate directly in the development of Meliadine West and potentially other projects in the Kivalliq region of Nunavut,” says KIA President Tongola Sandy.

Earlier this year, Andaurex dealt its LH gold property, near Silverton, B.C., to fellow junior Orphan Boy Resources (ORS-V). Under the deal, Orphan Boy agreed to buy the property by paying $150,000 before June 15, 2005. Andaurex retains a 1% net smelter return royalty, which Orphan Boy can buy for $1.2 million.

In 2001, Andaurex got out of the engineering, design and project management business to focus on mineral exploration opportunities. The junior has 6 million shares outstanding, posts a market capitalization of less than $2 million, and, at Sept. 30, 2002, had $275,000 in its kitty.

Meanwhile, Cumberland Resources has approved a $10.5-million work program for its wholly owned Meadowbank gold deposit in Nunavut. The program will include 16,000 metres of drilling, leading to the completion of a feasibility study and mine permitting before year-end.

A preliminary assessment in January 2002 indicated the project could support a production rate of 250,000 oz. per year at an estimated cash cost of US$168 per oz. over a mine life of eight years. About 85% of Meadowbank’s gold would be mined by open-pit methods.

Meadowbank hosts five closely spaced, near-surface gold deposits totalling 7.8 million tonnes grading 5.79 grams gold, or 1.4 million oz. of contained gold, in the measured and indicated category. The inferred resources consist of 10.9 million tonnes grading 4.44 grams gold, or 1.6 million contained ounces.

In 2002, Cumberland completed 16,000 metres of drilling. New resource estimates are expected in the second quarter.