It's about time....
Miramar Mining Corporation -
Miramar to acquire interest in Hope Bay project
Miramar Mining Corporation MAE
Shares issued 56,693,804 1999-12-06 close $0.73
Tuesday Dec 7 1999
Also Cambiex Exploration Inc (CBX)
Mr. Tony Walsh reports
Miramar Mining has entered into an agreement with Cambiex Exploration Inc. to acquire a 50-per-cent interest in the four-million-ounce-plus Hope Bay gold project in Nunavut for $13.34-million (U.S.) in cash. The acquisition is scheduled to close contemporaneously with Cambiex's acquisition of Hope Bay from BHP Diamonds Inc on Dec. 13, 1999.
"We are extremely excited about the proposed acquisition of Hope Bay," said Miramar president and chief executive officer, Tony Walsh. "This acquisition is in line with our strategy to grow our production base in the north and it will fit well with our operations at the Con mine, as well as the proposed acquisition of the Giant mine. We see excellent potential for synergies with our northern operating group, whose skills and experience we plan to use to advance this project rapidly towards a production decision.
"We believe that Hope Bay is one of the best undeveloped gold projects in Canada, with in excess of four million ounces of gold in resources already defined, giving Miramar an effective purchase price of $6 (U.S.) per ounce of resource going in, without diluting our shareholders. We believe the exploration potential at Hope Bay is tremendous and with this acquisition, we will have access to the entire 85-kilometre gold belt. We also look forward to working closely with the government of Nunavut, the Kitikmeot Inuit Association and Nunavut Tunngavik Inc., the local self government agencies that own the surface rights and certain sections of the mineral rights, to maximize the benefit of this project to all parties," affirmed Mr. Walsh. "Over the years we have built a good working relationship with government agencies in the north and we look forward to expanding this with our involvement in Hope Bay.
"Miramar brings a lot of experience in operating in the north with this type of greenstone hosted gold deposit," said Mr. Walsh. "Our staff at the Con mine has extensive experience in operating very similar types of mineral deposits in northern Canada, which will be a real benefit to the Hope Bay project. In addition, Brian Labadie, senior vice-president of operations, has over 20 years of operating experience at mines in Canada's far north, including the Con, Lupio, Pine Point and Polaris. His experience gives us a great deal of comfort in taking on a project like Hope Bay," he said.
Mr. Walsh also stated: "We are pleased to have the opportunity to partner with Cambiex, whose principals have an excellent track record in the mining business and have made significant improvements to the potential project value through their innovative approach to the project. Hope Bay offers excellent potential for the development of a large low cost gold mine in the north."
Hope Bay project
Hope Bay is a newly discovered Archean gold belt, similar to other major gold producing regions of Canada. The initial discovery of gold mineralization in 1992 led BHP to acquire virtually all of the Hope Bay belt and the property holdings acquired cover 1,016 square kilometres. The Hope Bay project came available because of BHP's corporate decision to sell its gold assets and focus on its other core businesses.
Since 1992, BHP expended $85-million on exploration, including 580,000 feet of core drilling, which has defined an inferred resource of 4.28 million ounces of gold in three deposits as detailed below.
Tons Grade Contained
Zone (millions) (g/t) Gold (oz)
Boston 5.666 13.10 2,391,352
Doris 2.100 17.80 1,200,000
Madrid 5.030 4.26 690,000
----------------------------
Total 12.796 10.40 4,281,352
The Boston deposit consists of classic Archean greenstone-style gold mineralization, very similar to the previously mined high-grade zones at the Con mine, and comprises multiple parallel lenses of high-grade gold mineralization in close proximity. The Doris resources occur in laterally and vertically extensive high-grade quartz veins. Madrid is a lower grade, near surface deposit with more complex geology.
In 1996-1997, BHP completed 2.3 kilometres of underground development at Boston, with a ramp accessing the deposit in two levels up to 200 metres below surface. The ramp provided access for 16,500 metres of close spaced underground core drilling in 230 holes, as well as the collection of 16,761 tonnes of bulk sampling. Doris and Madrid have been tested only from surface.
Exploration potential
"The Hope Bay project has tremendous exploration potential," stated Mr. Walsh. "In only five years, more than four million ounces of gold resources have been defined and we believe the potential of the belt may be much greater. The main deposits are open in all directions and numerous targets remain to be tested. With control of almost the entire 85-kilometre gold belt, we expect to see significant additions to our resource base," he said.
The two main deposits with defined resources, Boston and Doris, are open in all directions and offer significant potential for expansion. Boston has only been tested to depths of 780 metres below surface, where the deepest holes still contain significant gold grades. Possible strike extensions to the north and south remain to be evaluated. The Doris veins are laterally and vertically extensive, come to surface and are high grade. The Central vein has been traced over 2.9 kilometres and to depths of 590 metres; it averages 4.2 metres thick and grades 18.5 grams per tonne gold. The Lakeshore vein averages 4.16 metres thick and grades 15.86 g/t gold. It has been traced for three kilometres and to depths of 470 metres. The resources are contained in only a small portion of these veins that have been tested to date.
Outside of the two main deposits there are a significant number of other deposits and targets identified in this 85-kilometre belt, some of which have defined resources such as Madrid, to targets with single high-grade intercepts or surface rock sample anomalies of high interest. Madrid is the most advanced target, while reviews suggest the South Patch area offers the best immediate potential for additional high-grade resources to be defined.
Acquisition agreement
"On the basis of the agreement with Cambiex, Miramar's effective acquisition cost for its interest in Hope Bay will be $13.34-million (U.S.). This is just over $6 (U.S.) per ounce of resource, which we believe is a very attractive acquisition price for a high-grade gold resource in Canada," said Mr. Walsh.
In order to earn its 50-per-cent interest, Miramar will pay $13.34-million (U.S.) of the acquisition price from BHP, with Cambiex paying $5.84-million (U.S.). Cambiex will finance the first $1.3-million (U.S.) of exploration expenses at Hope Bay; Miramar will finance the next $2-million (U.S.), with Cambiex providing the next $4.7-million (U.S.). Thereafter, Miramar and Cambiex will finance activities on a 50/50 basis. Exploration activities will be managed by Cambiex, while feasibility work and operations will be managed by Miramar, all under a joint venture agreement and under the supervision of a joint management committee.
Closing of the agreement with Cambiex is subject to, among other things, completion of the purchase from BHP, the release of funds from escrow related to Cambiex's recent financing and final regulatory approval.
Development plans
Miramar and Cambiex plan to immediately start an extensive exploration and reserve development program focused on the Boston and Doris deposits. Work is planned to commence in January with a 25,000-metre surface and underground drilling program, which is intended to advance a substantial portion of the resources at Boston and Doris to the measured and indicated category, allowing conversion to proven and probable reserves as economic parameters are finalized.
The Hope Bay joint venture hopes to have a final resource estimate completed during the third quarter of 2000 sufficient to justify starting a feasibility study and permitting work at that time. "Currently, we envision the development of a 1,800/2,000 ton-per-day gold mine producing in excess of 300,000 ounces of gold per year at cash costs well below $200 (U.S.) ounces," confirmed Mr. Walsh. "Capital costs are estimated to be in the range of $100-million (U.S.) to $150-million (U.S.), with the capital and operating cost estimates based on work done by BHP and consultants to Cambiex."
Corporate strategy
"Hope Bay fits well with our northern strategy, as it takes full advantage of our financial and operating experience in the north and will be completed without diluting our shareholders at low equity prices. The acquisition will leave Miramar with a strong balance sheet and well positioned to take advantage of other corporate opportunities as they arise."
Miramar continues to evaluate producing acquisition opportunities but is focusing its efforts on low operating cost assets that would be able to withstand the uncertainties of the current gold market. "The best hedge against a low gold price is a low operating cost," said Mr. Walsh. "That is why Hope Bay is an attractive investment: it offers potential for significant, low cost gold production."
WARNING: The company relies upon litigation protection for "forward-looking" statements.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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