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kjmcap.com
CHASE RESOURCES (PRICE 12/31/95 - $1.17 ; Traded Toronto CQS). The price of Chase is down sharply this year, but if we had to pick a comeback candidate for 1996, this would be one of them. A strategic alliance with major copper producer Magma Copper which was concluded during the later part of 1995 should help Chase develop its Taysan Project in the Philippines which is simply too large and complicated for a junior exploration company to tackle.
To provide an idea of what kind of potential the Taysan holds consider the fact that Fluor Daniel Wright Engineers have confirmed an open pit reserve of 600 million tons grading 0.31% copper and 0.01 oz./ton gold. Within this orebody is a higher grade section of some 120 million tons grading 0.9% copper and 0.03 oz./ton gold. Fluor Daniel estimated an operating cost of $159 per ounce of gold and $0.40 per pound of copper which results in an average net operating in excess of $80 million per year and over $100 million per year for production from the higher grade material. Assumed in these cost figures was a 50,000 ton per day operation which would produce 150,000 ounces of gold and 110 million pounds of copper over a 30-year mine life. With basic infrastructure in place, easy access and gentle topography, the overall costs are expected to be lower than for other similar projects.
Magma, which produced 604 million pounds of copper in 1994 on its own, is already one of the larger copper producers in the world. Under the agreement with Chase, Magma will purchase 2.5 million shares of Chase by way of a private placement at Can $2.50 per share to provide a total to the company of Can $6.25 million for a 15.9% equity interest in Magma. In addition, Magma will pay to the company U.S. $1.0 million to acquire an option to earn 51% of the Taysan project until May 1999. To earn its interest in the project, Magma will be required to pay $2 million to the company on or before March 31, 1997 and then spend U.S. $5 million or complete a feasibility study on the project. Chase retains a 3% net smelter royalty. With Magma involved in the Taysan project which looks like a highly profitable gold/copper mine, and with Magma Copper now available to lend credability and know how to get the Taysan property evaluated and funded, we think 1995 tax loss selling provides you with a very good price to include/add Chase shares to your portfolios. As Chase hands off operating responsibility at the Taysan to Magma, investors should look forward to exploration results from numerous other highly prospective exploration projects. A rumor recently circulating has the company's affiliate, Delta Gold and Chase merging. This merger would result in the combined company having some $17 million in the till and numerous exciting gold and copper exploration plays in the Philippines. Telephone: (604) 685-6851 |
