Inca to acquire 49.9% interest in Moneta subsidiary
Moneta Porcupine Mines Inc ME
Shares issued 38,888,751 Feb 2 close $0.19
Tue 3 Feb 98 News Release
See Inca Mining Corp (IM) News Release
Mr Joel Scodnick reports
Inca Mining, and Moneta Porcupine Mines have entered into a letter
agreement which will allow Inca to acquire a 49.9% interest in Wounded Bull
Resources, a wholly owned subsidiary of Moneta, the consideration for which
will be satisfied by Inca's contribution of $5 million into WBRI (all
currency is quoted in US$).
Inca will acquire an additional 5.1% interest in WBRI once cumulative
profits of up to $15 million have been realized. Inca will have 90 days to
conduct a due diligence review and another 120 days to secure financing.
Idaho Minerals (IMI), a wholly owned subsidiary of WBRI owns the Wright
Creek perlite mine property which contains extensive perlite and pumice
reserves. IMI also owns ore processing and expanding facilities, and
operates a dated 18 ton per hour raw perlite processing plant, lying in
close proximity to the ore reserves, approximately 25 miles north of Malad
City, Idaho and a perlite manufacturing facility and related office and
warehouses in Malad City, Idaho, approximately 130 miles north of Salt Lake
City, Utah. IMI holds title to approximately 7,000 acres of mineral lands,
including 470 patented acres, which host at least 1O perlite, three pumice
and two obsidian deposits.
IMI was formed in 1996 when WBRI bought National Perlite Products for $1.9
million (NPP had operated the property up until 1993, but ceased operations
due to inefficiency). Since the purchase, WBRI has spent $450,000 on
drilling, permitting, property acquisition, independent geological, mining
and process engineering studies, which concluded with the recommendation to
build a new plant and haulage road. IMI is currently producing
approximately 1,500 tons per year on a break even basis.
According to a report produced for Moneta by independent consulting
geologist Frank Witzel, the NP-2 deposit contains measured reserves of
4,783,428 short tons and indicated reserves of 2,287,092 short tons. The
reserves of the NP-2 deposit are categorized based on the definitions
adopted by the US Geological Survey and the US Bureau of Mines. With annual
output of 180,000 tons per year, the NP-2 deposit alone could sustain an
operation for the next 40 years. Additional exploration drilling could
substantially expand the reserves at NP-2, and there are indications that
the deposit may be open to the north, west and possibly to the south.
Under the terms of the letter agreement the $5 million will be used to
finance mine equipment, plant construction at Virginia, Idaho, and haulage
road towards the Virginia Plant. The new plant will allow initial annual
output of about 125,000 tons per year and will rise to 180,000 tons by the
year 2003. The site is on the main line of the Union Pacific Railroad and
interstate 15. The Virginia location will also minimize transportation
costs for both IMI as well as its customers. IMI can ship to customers
directly by Union Pacific Railroad or by truck on interstate 15 (the new
plant will be adjacent to both). IMI will be the only perlite producer on
the Union Pacific main line which should allow it a competitive advantage
for target clients.
Processed perlite sold at an average of $28.14 per ton in 1996. The average
price for expanded perlite was $205 per ton although there is a wide range
in quoted prices from less than $100 to over $1000 per ton (1996 USGS).
Inca's management has decided to pursue other mining opportunities in the
industrial minerals sector allowing the company to diversify. The
acquisition will allow Inca to benefit from positive cash flows that will
in turn increase shareholder value. A more stable market in the industrial
minerals sector will mean that Inca can rely on a constant cash source for
use in exploring and acquiring other assets, both in the precious metals
and industrial minerals sector. Management is currently preparing a
business plan in order to finance the acquisition
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