NEWS RELEASE
FOR FURTHER INFORMATION PLEASE CONTACT:
South Pacific Resources Corp.
Cam DeLong, M.Sc. (Geol.)
(604) 687-5305
or
South Pacific Resources Corp.
Robert Chase
President and CEO
(604) 687-5305
The Alberta Stock Exchange has neither approved nor disapproved
the information contained herein.
NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: SOUTH PACIFIC RESOURCES CORP.
ASE SYMBOL: SHF
JUNE 20, 1997
South Pacific Resources Letter to Shareholders
VANCOUVER, BRITISH COLUMBIA--South Pacific Resources Corp.
announces that the following letter was sent to all shareholders
today.
Dear Shareholder,
I am concerned that some shareholders may be misinformed regarding
the Company's future plans and direction which in turn is one of
the factors which may be contributing to a continued decline in
the Company's share price. In my opinion, the Company's current
share price is significantly under valued.
During the past 8 months, the Company's share price, together with
that of many other junior exploration companies, declined in
response to the revelations concerning the Bre-X fraud, Indonesian
business ethics and the salting allegations against two other
junior mining companies. None of these events had anything to do
with the Company's exploration activities but the market reacted
as if they were related. Our share price declined to less than
$1.00 from the $6.00 per share range last October. During this
same period, significant positive progress was made in evaluating
and securing the Company's Indonesian properties including:
- The signing on April 28/97 of all seven of the Company's 6th
Generation Contracts of Work with the Indonesian Government;
- A high grade 22 meter gold intercept at the Ongkang Vein
prospect averaging 66 g/t;
- The start of two drill programs, one at the Kiwi, Masupa Ria
prospect and the other at Sori Hill, the results of which are
still awaiting assays expected in July;
- The conclusion of a report on the diamond potential of two of
the Company's properties which will be used to attract a joint
venture with a diamond company; and
- The identification of two major drill targets in the Mandor
area which are expected to be drilled later this year.
The above list highlights just a few of the Company's
accomplishments during the past eight months. Many more
accomplishments were detailed in the Company's 1996 Annual Report,
the 1997 first quarter report and in the ten 1997 news releases
put out to date. Yet, despite these accomplishments, the Company's
share price collapsed.
Last year, the market pricing pendulum may have swung too far and
too fast in overvaluing some junior exploration companies.
However, the current situation is just as unbalanced with the
pendulum swinging in the opposite direction and undervaluing the
junior resource market. I believe it is only a matter of time
until the market returns to a balanced position resulting in a
more accurate valuation of the Company's existing assets and
future potential.
I also believe that bleak market conditions such as these provide
excellent opportunities for both the Company and its shareholders.
Shareholders are now able to acquire shares at discounts which
were unthinkable just a few months ago. In addition the Company is
able to use one of its most valuable assets, "cash on hand", to
consider other opportunities to increase shareholder value.
The Company's cash resources were Cdn$7.1 million at the end of
May. If we had continued with our earlier planned Indonesian
exploration program, all of these cash resources would have been
spent by year end. Normally, a junior exploration company such as
South Pacific expects to have the ability to replenish its
treasury from the issue of additional shares, hopefully at a
higher price than the last issue because of positive exploration
results. However, current market conditions are anything but
normal insofar as junior exploration companies are concerned,
especially for those focused on Indonesia. In addition, there is
no assurance that market conditions will change in the near term.
Consequently, we have been forced to reconsider both our
Indonesian exploration program and our original plan of only
exploring in Indonesia.
The Company's future plans and direction can be summarized as
follows:
- The existing Indonesian properties are valued concessions which
we intend to maintain as part of the Company's core group of
assets.
- The Company will seek joint ventures with other companies in
order to spread the risk and cost of exploring in Indonesia.
- Several high potential, low cost exploration targets already
identified on the Indonesian properties will be drilled as soon as
possible.
- Future Indonesian spending will be minimized until such time as
either the capital markets reverse their current negative position
on Indonesia or joint venture partners are found who will spend
their funds in return for an interest in the property.
- The Company will actively seek exploration opportunities in
other geographic locations with Central and South America the
preferred locations currently being considered.
- Acquisitions, dispositions, business combinations or mergers
with other companies will all be actively considered in the course
of pursuing our constant goal of enhancing shareholder value.
The past several months have been very difficult for both the
Company and its shareholders. Many of the Company's institutional
shareholders, who have been our strongest supporters in the past,
have recently been forced by policy or directive to divest
themselves from all junior exploration companies especially those
with Indonesian activities. This has severely depressed the market
price of almost all exploration companies at the expense of both
retail and institutional shareholders alike.
However, I remain optimistic. Indonesia is still home to some of
the most prospective areas in the world for elephant size
discoveries. Eleven major mining companies are in the process of
reviewing our Indonesian properties for joint venture
consideration. We have the signed and enforceable consent of the
Indonesian authorities to explore on some of the best ground in
Indonesia. We have the cash resources to take maximum advantage of
several opportunities to diversify the Company's exploration
activities. We also have the commitment and resolve of the
management and directors to do everything we can to make the
Company a success.
Yours truly,
SOUTH PACIFIC RESOURCES CORP.
Robert F. Chase, President and CEO
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