Year end results
Corner Bay Minerals Inc BAY
Shares issued 6,791,957 Nov 10 close $0.48
Wed 11 Nov 98 Company Review
Mr. Peter Mordaunt reviews the company
ALAMO DORADO
The Alamo Dorado gold and silver property is located near the town of Alamos in the State of Sonora, Mexico. The property consists of 5,394 hectares, of which 509 hectares were optioned from the vendors in September 1997. Under the terms of the agreement, Corner Bay's Mexican subsidiary can earn a 100 per cent interest in the concessions by making a series of cash payments totalling $800,000 (U.S.) over a four-year period. There is no royalty payable once this interest has been earned. The company is finalizing plans for a second phase of drilling. This program is expected to be completed before the end of 1998.
CERRO VERDE
The Cerro Verde Copper property is in the State of Sonora, Mexico. The exploration concessions were optioned in the spring of 1994. Under the terms of the initial agreement Corner Bay's Mexican subsidiary can earn a 100 per cent interest in the concessions with no residual royalty. In April of 1996, a wholly-owned subsidiary of Phelps Dodge signed an exploration agreement for the property. The terms of the agreement call for Phelps Dodge to make expenditures up to $1,300,000 (U.S.) within a five-year term and pay a total of $270,000 (U.S.) within the same period. Phelps Dodge has fulfilled the exploration requirements, and has a 60 per cent interest in a joint company that has been formed to advance and develop the property. Minera Corner Bay now has a 40 per cent interest in the joint company. Field work by Phelps Dodge in 1996 and early 1997 on the property led to the acquisition of several adjacent concessions from other vendors as it is believed that the copper-bearing system is larger than both companies originally visualized. The main area of mineralization observed on surface is approximately 1,000 metres long and 300 metres wide. Mapping has indicated a 100-metre vertical extent of copper enrichment and mineralization. This mineralization is characterized by prominent copper oxide minerals formed by supergene enrichment of a porphyry copper deposit believed to be emplaced beneath Cerro Verde. In the summer of 1997, an 11-hole drill program was completed across the optioned adjacent concessions to the north and east of the Main zone. Anomalous copper and gold values were intersected in all 11 holes. The next program is expected to continue exploring the Main zone near-surface oxide copper mineralization. This large oxide copper target may be amenable to heap leach, solvent extraction (SX) of copper followed by electro-winning (EX) of cathode copper. The property has excellent infrastructure with a paved road running across it and within 1.5 hours of the State Capital, Hermosillo. The supply of acid for a heap leach facility is plentiful within the State of Sonora and Corner Bay is well-positioned with a strong technical partner.
LAS VIGAS
The Las Vigas Oxide Copper Property is in the State of Chihuahua, Mexico 70 kilometREs from the Texas border. Minera Corner Bay's work has outlined five important oxide copper zones within sedimentary red bed stratigraphy. The potential of this project is considered good for a bulk tonnage oxide copper deposit that would be amenable to bulk mining, heap leaching, solvent extraction (SX) and final electro-winning (EW) of cathode copper. There is also potential for a deeper sulphide deposit. Infrastructure on this property is considered excellent for access, water, electrical power, labour and all other mine related items.
CANADIAN PROJECTS
Chibougamau, Quebec
The Company's Chibougamau copper deposit is now being readied for development. Corner Bay held 70 per cent of this project (SOQUEM - 30 per cent) until 1994 when it optioned the project to MSV Resources. MSV owns and operates a 2,400 tonne per day concentrator that is 40 kilometres from the copper deposit. This option was recently replaced by a purchase agreement whereby MSV will pay a price equal to the net present value of the previously negotiated royalty with a discount rate of 10 per cent and fixed assumptions that included a total of 715,000 tonnes of material containing an estimated 67 million pounds of payable copper and a five-year life of the project. The purchase price will vary with the market price of copper and with the exchange value of the Canadian dollar with the U.S. dollar. MSV will pay 70 per cent of this value to Corner Bay and 30 per cent to SOQUEM in three annual instalments.
The first instalment, valued at $371,025, has been paid to SOQUEM and Corner Bay (50 per cent cash/50 per cent MSV common shares). The following two instalments are due to the company (100 per cent cash) on the next two anniversary dates. As an additional consideration, MSV will pay a 2 per cent nsr for any minerals mined from the property after production of 750,000 tonnes (70 per cent for Corner Bay and 30 per cent for SOQUEM). The Chibougamau copper deposit has drill indicated reserves of 1,627,300 tonnes at an average grade of 4.04 per cent copper. Potential exists for enhancing these reserves and it is anticipated that reserves will be replaced as they are mined. With annual production for this mine expected to be in the order of 250,000 tonnes and a grade of 4 per cent copper, the number of pounds of copper produced annually is expected to be 20 million or more. MSV is expected to start work to access the underground for mining shortly. On the Corner Bay Group One “Outer Block” property, also in Chibougamau, joint venture partner SOQUEM has earned a 50 per cent interest by making $1-million of exploration expenditure. Drilling on several new zones as well as follow-up on previously recognized copper zones has provided encouraging results that could ultimately enhance the mineable reserves at this property which surrounds the known copper deposit.
Dufferin Gold Property, Nova Scotia
Under the terms of an arrangement Corner Bay has granted an option on the Dufferin gold property in Nova Scotia to Dufferin Resources. The terms call for an initial cash payment plus yearly preproduction royalties. Once production commences on the project, Corner Bay will receive a nsr of 3 per cent. The Dufferin property was the focus of underground development and construction of a 100 tonne per day plant. Currently, Dufferin Resources is in default of its requirements but is working on a financing to place the property into commercial production.
Moose River Gold Property, Nova Scotia
In 1996 the company completed an option agreement on the Moose River gold property in Nova Scotia. A private company optioned the project and over a four-year period can earn a 100 per cent interest by making cash payments totalling $100,000 and making exploration expenditures of $750,000. Once the new group has earned its interest, Corner Bay will receive a 3 per cent nsr on all gold produced on the property. In addition, there are preproduction royalty payments of $25,000 per year after the four year earn-in.
Tetagouche Lake Property, New Brunswick
Corner Bay (53 per cent) and joint venture partner Roycefield Resources (47 per cent) have signed an agreement with Teck Corp. on the Tetagouche Lake property near Bathurst, New Brunswick. The property consists of 87 claims where past exploration has included soil geochemistry, geological mapping, geophysics and diamond drilling. Several good lead and zinc anomalies are known to exist on the property which is along strike of the Caribou mine. The terms of the deal allow Teck to earn a 100 per cent interest in the property by making payments totalling $100,000 and incurring exploration expenditures of $400,000. The agreement also calls for Teck to pay a 2.5% nsr on production to Corner Bay Minerals Inc. and Roycefield Resources Ltd. pro rata.
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