Minnova/Rea Gold get approval for B.C. mine

Because going- it-alone to production is proving too costly a proposition for many juniors in British Columbia these days, a good many of the province’s advanced projects seem to be finding their way (directly or indirectly) into the hands of well financed and experienced major mining companies.

A recent example is the Lara property on Vancouver Island, originally owned 65% by Abermin Corp. (TSE) and 35% by Laramide Resources (VSE). Abermin recently accepted an offer by Laramide to buy out its interest as it was experiencing a cash crunch brought about by start-up problems at the joint- ventured (with Granges Exploration) Tartan Lake mine in Manitoba.

In order to finance the $2.3-million cash purchase price, Laramide made a deal with Minnova Inc. (TSE) which resulted in Minnova agreeing to purchase 2.5 million shares of Laramide at 90 per share. In addition, Minnova has the option to earn up to a further two million shares by making exploration and development expenditures involving the Lara property at the rate of one share for every $1 of expenditures for the first $1 million, and one share for every $1.50 of expenditures for the next $1.5 million of expenditures.

The agreement is subject to regulatory and shareholder approval, but if fully consummated, will result in a change of control; with Minnova becoming a major shareholder of Laramide.

The completion of the purchase of Abermin’s interest will give Laramide a 100% interest in the gold-base metals deposit which has drill-indicated reserves estimated at 583,000 tons averaging 1.01% copper, 1.22% lead, 5.87% zinc, 2.92 oz silver and 0.138 oz gold per ton. (The purchase also involves a 10% royalty of net profits from production which, at the option of Abermin and exercisable until Oct/1990, is convertible into 5% of the issued capital of Laramide on a fully diluted basis.)

According to Albert Reeve, president of Laramide, the property is well situated for low mining costs and has “outstanding geological potential for expanding reserves.” Reeve adds that Minnova’s recognized expertise in developing and operating Canadian polymetallic mines will provide the company with “the essential financial strength to advance the Lara project toward production.”