SOUTHEAST ASIA SPECIAL — Colony Pacific forms an alliance with Inco

Vancouver-based junior Colony Pacific Explorations (TSE) will form an alliance with Inco (TSE) to explore and develop mineral deposits in Indonesia.

The alliance will be restricted to Sumatra, initially focusing on Inco’s Kareng and Gedang properties on the southern end of the island.

These properties comprise 3,000 sq. km along a major volcanic arc and contain areas of porphyry copper-gold and gold mineralization and alteration, together with stream sediment geochemical anomalies.

The initial US$5-million program will consist of airborne geophysical surveys, mapping and sampling, followed by additional ground surveys and diamond drilling.

Colony can acquire all of Inco’s interest in both properties by spending US$12 million on exploration over four years. Inco will then have the right to re-acquire a 60% interest in the properties by funding the next US$30 million in exploration and development work.

The nickel giant will explore for other prospective properties on Sumatra for option to Colony, and will have a 50% participation right in any Colony financing to raise exploration and development funds. Inco will also help Colony to raise funds for its share of mine development costs.

Imperial Metals (TSE), which holds 60% of the shares of Colony Pacific, will provide ongoing management and administrative services to that company.

Inco has agreed to buy 700,000 units of Colony at 73 cents each. A unit consists of one common share and one warrant exercisable at $1.50 until May 31, 1997. and at $2.50 until May 31, 1998.

The agreement has yet to be approved by shareholders.

Inco has been exploring and mining in Indonesia for more than 25 years, and has invested more than $1.5 billion in the development of the Soroako nickel mine on Sulawesi island.