Echo Bay tightens grip on Etruscan

Denver-based Echo Bay Mines (TSE) will buy more than 1.5 million shares of Etruscan Enterprises (VSE).

The major will pay $4 million for the certificates, priced at $2.60 each, thereby increasing its interest in the junior to 15%. Echo Bay will also receive an equal number of non-transferable share purchase warrants entitling it to buy an equal number of Etruscan common shares, priced at $3.50 each, until March 15, 1997.

In addition, Echo Bay will receive an exclusive 60-day option to acquire a 44% interest in the Koma Bangou gold deposit from Etruscan.

The deposit, situated in Niger, West Africa, contains 800,000 oz. gold based on geological reserves of 11.3 million tons averaging 0.072 oz. gold per ton to a vertical depth of 230 ft.

The option agreement states Etruscan must spend at least $3 million to complete a mining feasibility study while Echo Bay will be required to spend $500,000 on evaluation and other related studies.

Etruscan began working in Niger last summer when it signed an option agreement with L’Office National des Resources Minieres (ONAREM), covering the Koma Bangou concession.

The junior can earn a 67% interest in the property by spending US$5 million on exploration and development over two years and by carrying out a feasibility study within three years of signing the agreement. The joint venture is operated by Etruscan, which has carried out 31,000 ft. of reverse-circulation drilling and 9,800 ft. of trenching. Initial results are said to be encouraging, and once they are fully evaluated, the company will intensify exploration.

The new agreement with Echo Bay gives the senior company an exclusive option (for 60 days from the date of submission of the feasibility study) to buy 65.67% of Etruscan’s 67% interest. The purchase price will be based on possible, probable and proven geologic reserves as determined in the study. Echo Bay will pay Etruscan US$20 per oz. for the first 1 million oz. of reserves and US$25 for each additional ounce thereafter.

Should the option be exercised, Echo Bay would hold a 44% interest in Koma Bangou. Etruscan and ONAREM will each have 23%, and the remaining 10% will be owned by the Nigerien government.