Cliff ups interest in Newfoundland asbestos operation

Junior Cliff Resources (TSE) has an option to acquire Princeton Mining’s (TSE) half interest in the share capital of Teranov Mining, a Princeton subsidiary.

Teranov operates a wet mill at Baie Verte, Nfld., where chrysotile is recovered from tailings obtained from the old Baie Verte asbestos mine. It does so by using a process patented by Cliff, which receives a 1% royalty on sales from the operation.

Cliff signed the option agreement with its majority shareholder, Black Hill Minerals of Australia.

The option is exercisable up to May 1, 1994, by payment to Princeton of $1 million cash and eight million Cliff shares valued at $2.8 million. Black Hill has already acquired the other half interest in Teranov from Princeton. The wet plant closed for the winter in November and is scheduled to re-open in April, 1994. During the shutdown, modifications will be made to improve the quality of fibre produced.

Although Cliff anticipates a positive cash flow from the operation in 1994, it is required to fund half of any cash deficit incurred after Black Hill advances $1 million to Teranov as working capital.