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Pan Asia Mining Corp - News Release
Changma diamond mine acquired; $3.5m private placement
Pan Asia Mining Corp PAR
Shares issued 11,570,650
Oct 14 close $2.25
Tue 14 Oct 97 News Release
Mr Tun Aye Sai reports,
The company is pleased to announce the acquisition of the Changma Diamond Mine, a major producer of diamonds and two advanced diamond exploration and development projects in the People's Republic of China, disclosed in news releases dated August 22 1997 and August 27 1997, has successfully closed.
The company received final acceptance for the acquisition from the VSE on October 9 1997 and purchased all of the issued shares of Winluck (Bahamas) on Friday, October 10 1997 as scheduled.
The terms of the acquisition were revised from those previously announced such that:
1. Robert Friedland received 30,000 shares of the company directly in lieu of 30,000 shares of the company which were to be issued to Ivanhoe Capital Corp;
2. Pan Asia Resources Corp, a company controlled by the Poe Family Trust, received 257,000 shares of the company as part of the acquisition in accordance with the assignment of a note payable to Olds Industries Inc by China Diamond Corp. Transfer of the shares is subject to VSE acceptance.
3. The purchase price of all of the issued and outstanding shares of Winluck was reduced from 7,076,923 common shares of the company to 6,953,846 shares of the company at a deemed price of $3.25 per share for a value of C$22.6 million plus a debt of C$250,000 for a total value of C$22,850,000. The purchase price shares are subject to a hold period expiring August 20 1998.
On October 9 1997, the exchange accepted in principle the company's private placement of 2,257,064 units at $1.55 to Conquest Finance Corp. The units are comprised of one share and one half share purchase warrant (exercisable at C$1.55 in the first year and C$1.78 in the second year). Gross proceeds of the private placement are C$3,500,000.
A term of the private placement was amended on October 9 1997 such that the finder's fee payable to Best Choice Limited in connection with the private placement was reduced from $350,000 to $207,500. The private placement must close within 45 days of the exchange's acceptance in principle dated October 9 1997.
701 Changma Diamond Mine Joint Venture
The 701 Changma diamond mine has historically been the largest producer of diamonds in China. Since 1975, the mine produced over 800,000 carats of diamonds from two adjacent diamondiferous kimberlite pipes, 40m apart. Average annual production for the past seven years was approximately 45,000 carats. At surface, the two pipes are collectively 230m in diameter. They have been extensively explored to a depth of 600m and are open at depth.
The Changma diamond mine is currently an open-pit operation about 100m
deep. Mining can proceed for another 5m before conversion of the mine to an underground operation.
The mine has historically yielded some exceptionally large stones, 119 carats in 1983, 67 and 66 carats in 1991, and every year continues to recover some remarkable stones from its production.
Based on a recent technical review by Fluor Daniel Wright, the shafts,
tunnels, dense media separation equipment and other improvements are
expected to enable the new underground mine to process 500 tonnes of ore a day for 330 days a year, yielding 168,000 carats per year in each of the first four years and 146,000 carats per year thereafter.
Proven and probable reserves were estimated by Kilborn Engineering Pacific at 2,044,333 tonnes, at an average grade of 1.03 carats/tonne based on previous drill hole data and bulk sampling data from 170 to -40m elevation. The inferred resource from -40m to -340m is 1,377,939 tonnes at an average grade of 0.77 carats/tonne (refer to news in Stockwatch October 10 1997).
The company is required to make total capital contributions of US$3.0
million to earn a 50% interest in the joint venture. Capital contributions to date have been US$500,000. Subsequently, depending on the additional investment contributed by the company, the interest in the joint venture could be increased.
702 Xiyu Project Joint Venture
The 702 joint venture project consists of the Xiyu kimberlite occurrences, a cluster of seven diamondiferous kimberlite pipes, the best being Pipe 28 and access to the whole Mengyin County of 1,500 sq km for diamond exploration. Drilling results indicate the Xiyu pipes will join at approximately 330m of depth, forming one large diamond bearing kimberlite pipe.
The whole Xiyu complex of the 702 joint venture was discovered as a result of magnetic surveys in 1965 and was intensively trenched and drilled during 1967-1972, A decline was sunk to 90m below surface (155m level) and each pipe (including pipe No. 28) was tested by underground workings. Large diameter drilling down to 450m deep was performed at that time to test the depth potential and geological structure of the formation.
The seven diamondiferous pipes are reported by No. 7 Geological Brigade of Shandong Province to contain a resource in excess of five million carats (refer to October 10 1997 news release) and are open to depth. Previous geological exploration data from No. 7 Geological Brigade have been reviewed by Kilborn Engineering Pacific and Fluor Daniel Wright which confirmed that resources on these pipes are sufficiently well-established to justify the commencement of a bulk-testing pre-feasibility study.
The company is planning to bulk-test 100,000 tonnes of ore and conduct a feasibility study for a 5,000 tonnes per day open-pit mine.
The company is required to make total capital contributions of US$5 million to earn a 50% interest in the joint venture. To date capital contributions have been US$250,000.
703 Pingyi-Feixian Diamond Joint Venture
The 703 joint venture project consists of 1,620 sq km of exploration area. Alluvial diamonds and kimberlite minerals have been discovered throughout much of this area. A total of 2,732 diamonds, of which 56 diamonds are +2mm size, have been collected from rocks and unconsolidated alluvial material during previous exploration work. Previous airborne geophysical surveys identified 496 magnetic anomalies which need to be followed up by detailed exploration work.
The company will conduct ground and airborne magnetic surveys,
geochemistry, mapping and delineation of diamond resources. At this time geologists from No. 7 Geological Brigade continue with geological exploration work. The company is planning to engage a diamond exploration expert to direct the diamond exploration program in both 702 and 703 joint venture areas.
The company is required to make total capital contributions of US$1.5
million to earn a 50% interest in the joint venture. Capital contributions to date have been US$95,000.
As previously reported in news releases, the company also has the right to earn a 50% interest in a China joint venture which operates the Huixian copper/gold mine and the surrounding exploration area in Zouping County, Shandong Province.
For more information please contact Malinda at:
Phone: (604) 608-6686
Toll free: 1-888-328-8833
Fax: (604) 608-6687
Website: www.panasiagroup.com |
