Yorkton says buy
Troymin Resources Ltd TYR
Shares issued 21,789,177 Jun 4 close $0.71
Fri 5 Jun 98 Research
Art Ettlinger says why
On April 9, Troymin Resources announced its intention to enter into a joint
venture agreement with Monopros Ltd., the wholly owned Canadian exploration
arm of De Beers. The terms of the proposed joint venture agreement allow
Monopros to earn up to a 60 per cent interest in 1.1 million acres (five
prospects) lying within the Buffalo Head Terrane. Troymin currently holds a
100 per cent interest in these properties. Monopros will earn a 51 per cent
interest by incurring exploration expenditures of $5.5-million by Feb. 28,
2002. A further 4 per cent interest may be earned by financing 100 per cent
of the initial $15-million of expenditures on the five property blocks. The
final 5 per cent interest can be obtained if Monopros arranges financing
for Troymin's share of the costs associated with developing the first mine.
Subsequent to this agreement, Monopros has agreed to purchase a private
placement in Troymin consisting of 428,000 units at 70 cents per unit. Each
unit consists of one common share and one warrant exercisable at $1.05 for
two years.
It is interesting to note that the terms of the agreement as outlined in
the news release of April 9, are generally similar to the original
agreement made among Ashton, Alberta Energy Company and Pure Gold Minerals.
Total expenditures required by Ashton and Pure Gold to earn a combined
interest of 57.5 per cent from Alberta Energy (compared to the 60 per cent
Monopros may earn from Troymin) was also $5.5-million. Similarly, the size
of the land areas covered by the two agreements is 1.45 million acres and
1.1 million acres for Ashton and Monopros, respectively. Perhaps the
private placement in Troymin by Monopros can be viewed as a small premium
that is being paid for entry into the Alberta diamond play now that
diamondiferous kimberlites are known to occur in Alberta.
We believe the agreement between Troymin and Monopros is a significant
development for Alberta. The participation of Ashton and now Monopros, two
highly competent and tightly managed exploration and mining companies,
brings world class diamond industry experience to the province. Investors
must realize, however, that these two companies are 100 per cent focused on
finding diamond deposits. Playing to market demands and tailoring
exploration programs to best suit market cycles only distracts from their
efforts.
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