ATLANTIC REPORT Credibility for Nova Scotia

The recent takeover bid for Halifax-based Seabright Resources by the multi-billion-dollar Australian mining conglomerate Western Mining Corp. Holdings has finally given credibility to Nova Scotia’s Meguma goldfields.

Through its wholly-owned subsidiary wmc Acquisition (Canada) Corp., Western has offered to acquire all of Seabright’s 10.7 million outstanding Class A shares at $8.50 per share and all Class A share purchase warrants at $3 each, for a total of $92 million. Western already owned 6% of Seabright’s stock before announcing its intention in mid-December to go after the remainder.

Western’s offer is conditional upon holders of at least 67% of the outstanding Seabright Class A shares tendering their shares by midnight, Jan 27. If they don’t, Western may extend its offer, accept the shares that have been tendered, or call off the deal. If holders of at least 90% of Seabright’s shares and warrants accept the offer, Western could acquire the rest under the compulsory acquisition clause of the Canada Business Corporations Act. Seabright President Terence D. Coughlan and two other directors, Frederick C. Hansen and William S. McCartney, have agreed to tender their combined 17% shareholdings and 5.5% warrant holdings.

Seabright’s Class A share price has ranged from 80 cents to as high as $12. The stock traded in the $10-$11 range early last fall, but dropped to $5-$6 following Oct 19. Immediately after the announcement of Western’s takeover offer, Seabright stock jumped to $8 per share, just under the price being offered by Western, where it has remained. 25,000 oz gold in 1988

A projected 25,000 oz of gold could come from Seabright’s Beaver Dam and Forest Hill properties in Nova Scotia in 1988. The company has announced reserves of 400,000 tons of ore grading 0.5 oz per ton from Forest Hill in Guysborough Cty. A bulk test of gold- bearing veins at Forest Hill resulted in the ceremonial pouring of a 543-oz gold bar last June. Seabright has produced about 7,000 oz of gold since then from its bulk testing programs, at a cost of $250-$300(US) per oz.

Seabright its still evaluating the Beaver Dam gold property in Halifax Cty., which it acquired in 1985. Surface and underground exploration have defined geologic reserves of 2.2 million tons grading 0.29 oz. The company is trying to determine if it’s better to mine the deposit in bulk or by more selective techniques.

If Western gains control of Seabright, it would acquire other significant assets, including the Gays River processing plant at the former Esso Resources Canada lead- zinc mine at Gays River, Halifax Cty., and a majority interest in Seabright Explorations, which holds several former gold-producing areas. Seabright bought the mill for $3.4 million in 1985 and converted it to a gold mill with a capacity of 900 tons per day. The mill’s replacement cost would be 10 times what Seabright paid for it.

Western’s interest in Seabright seems to arise from a combination of three factors: approval of Seabright’s corporate style and accomplishments; optimism about Nova Scotia’s geological environment, coupled with Western’s experience in identical terrain in Australia — which probably makes Western better able to understand the local geology than any other foreign company; and Western’s desire to take a strong position in Canada’s minerals sector.

Western’s offer for control of Seabright is as much an endorsement of the gold potential of Nova Scotia’s Meguma goldfields as it is a compliment to Seabright. Western has successfully mined gold in the Bendigo goldfields of Australia, which have geology similar to Nova Scotia’s goldfields. Western’s interest in Seabright has created an air of optimism in Nova Scotia’s mining community.

Torene Gold Exploration, a Dartmouth-based company with gold properties in Nova Scotia and Ontario, has been one of the few Maritime mining stocks to rebound after the October market decline. Listed on the Alberta Stock Exchange, its share price climbed steadily late in the year, reaching $1.80 at the end of December.

Torene’s President W. A. MacPherson, P.Eng., who directs the company’s technical program through W. A. MacPherson and Associates, says the Toronto engineering firm of MacKenzie Resources has been commissioned to study and do a cost estimate on the feasibility of going underground at the company’s Harrigan Cove gold property in Halifax Cty.

Torene has two drills on the property and 47 holes have been drilled to date. “In our first program of 28 holes, we had 28 sections of visible gold,” he reports. Torene will spend another $500,000 at Harrigan Cove in the first part of this year, making a total of more than $1.5 million spent there since late 1966.

At Harrigan Cove, eight gold- bearing zones have been identified over a strike length of 1,150 ft and a width of 850 ft. The property has potential for further discoveries, as only a small portion of it has been explored by drilling. Torene has delineated an estimated 100,000 tons of ore grading 0.35 oz per ton to an explored depth of 300 ft.

Torene has also obtained gold values from geochemical investigations on its Elizabeth Lake claims in Lunenburg Cty. It plans to drill geophysical and geochemical anomalies on the Mitchell Brook property in Guysborough Cty. where a 60-ft drill section assaying 0.243 oz was reported in previous investigations. Expanded resource base

Torene has expanded its resource base by searching for gold in other geologic environments and by looking for other metals. To that end, it has optioned 110 claims outside the Meguma Group in the Browns Mountain area of Antigonish Cty. MacPherson has compared the geology there with the Val d’Or area of Quebec. Unspecified gold values have been obtained in silt and rock samples from the area. Torene has also staked claims on properties in Cape Breton with gold and base metal potential.

Torene recently diversified into the bottled water business, acquiring rights to an 8-sq-mile watershed in Cape Breton containing several pure water springs. With joint venture partners Bevpo Canada of Calgary and Dr W. Shaw of Antigonish, newly-formed Ocean Springs and an unnamed joint venture partner may build a bottling and distribution plant near Sydney. An anouncement about the endeavor is expected soon.

In other news, Halifax investment executive David Carnell has become Torene’s vice-president finance.

Acadia Mineral Ventures of Toronto has three rigs drilling in the Rocky Brook-Millstream area west of Bathurst, N.B. Targets are a gold- silver situation near old base metal mines. One rig is drilling a sulphide- gold zone west of Millstream. According to vice-president Avard Hudgins of Truro, N.S., the geology there is similar to the Elmtree gold deposit which Lacana is currently evaluating. Acadia has a 30% interest in the latter venture.

Two of Acadia’s rigs are working near the old Nigadoo silver mine, where zoned gold-sulphide veins are believed to exist.

Acadia and Seabright Explorations of Halifax will soon be drilling on a 50-50 joint venture east of Millstream near old base metal deposits. “There are excellent indications that gold exists in exstensive sulphide deposits there,” says Hudgins.

Acadia was aggressive in its exploration efforts last year, looking for precious metals in the base metals terrains of northern New Brunswick. The company plans to spend well over $1 million in New Brunswick on exploration of its own and in joint ventures.

In Nova Scotia, Acadia has given Hecla Mining an extension until the end of February to complete a study of the potential of Acadia’s Mooseland gold property.