Total may sell Tundra gold stake

A 49% interest in the Tundra gold project in the Northwest Territories is one of many mineral projects being unofficially put on the block by the parent company of Total Energold (TSE). Total Resources (Canada), a 100% owned subsidiary of Total Compagnie Francaise des Petroles, is reviewing a number of alternatives for the disposition of certain of its interests in Total Energold. The Canadian subsidiary of the large French energy producer and marketer owns about 74% of Total Energold’s 25.9 million outstanding shares.

Total Resources is also considering a reorganization which would completely separate Total Energold’s mineral assets from its oil and gas assets.

“Nothing definitive has been decided,” said Frederick Davidson, Total Energold’s chief financial officer. “I think the real concern they (the parent companies) have is the current market prices of our stock does not reflect the underlying value of the assets.”

Total Energold has interests in oil and gas exploration and production in Canada through its 56% owned subsidiary, Ranchmen’s Resources. And it is involved in mining exploration and development projects directly and through its 51% subsidiary, Plexus Resources (TSE). Total Energold also has a 12.5% interest in the VenturesTrident II Ltd. Partnership which in turn has investments in several mineral ventures.

Davidson noted that the value of Ranchmen’s shares is worth about twice the value of Total Energold’s shares, which gives the mining assets a “negative value.”

In mining circles, Total Energold is best known for having acquired a 49% interest in the Tundra project through its 1988 takeover of Getty Resources. The acquisition cost an estimated $139.6 million. Reserves at the time were estimated at 32.5 million tons grading 0.20 oz. gold per ton at a cutoff of 0.12 oz.

Following the completion of a $35-million underground program in the fall of 1989, 51% owner Noranda (TSE) reported that grades were lower than expected. The project was deemed uneconomic under gold prices at that time.

Total Energold is continuing exploration at its Erickson gold mine in northern British Columbia, and results to date have the company optimistic production might be resumed at the former producer.