Place hopes are riding on Golden Rose property

Despite the apparent lack of shareholder interest in the activities of Place Resources, chairman Michael Butler expects 1987 to be a banner year for the Toronto company.

Only six shareholders attended Place’s recent annual meeting in Toronto. But as he awaits the expected rise in world oil prices, much of Mr Butler’s optimism rests on Place’s interest in the Golden Rose gold project near Sudbury, Ont., which is scheduled to go into production this summer. A joint venture with project operator Emerald Lake Resources, the Golden Rose deposit has drill-indicated reserves of 2.4 million tons grading 0.23 oz gold per ton.

Under a late 1986 agreement, Teck Corp., Place and Noramco Capital confirmed a convertible debenture financing of Emerald Lake where $4.5 million is being spent on its pre-production program. Capital costs are projected at over $10 million, an additional part of which has been covered by equity issues.

Place is providing 25% ($1.125 million) of this debenture financing which is convertible into Emerald Lake Resources’ shares at between $3.00 and $4.00 per share over five years.

At today’s market value, Place could earn approximately $3.5 million from the debenture.

Surface construction, underground ramping (total length 4,000 ft) and development diamond drilling were undertaken in late 1986 and are continuing.

The company is forecasting a mill rate of 400 tons of ore per day and a recoverable grade of 0.3 oz annually when the mill is at full capacity.

“As a follow-up to the Emerald Lake project, we are negotiating with three Ontario mining groups and we hope to participate in joint ventures later this year,” said Mr Butler at Place’s recent annual meeting.

The company is also looking out for favorable ventures to add to its portfolio of oil and gas properties which include the 78,265 acres property near Port Dover, Ont. Of the 106 producing wells located on the property, 74 are held outright by the company with the remainder equally owned with and oper ated by Mitchell Energy Corp.

Despite tumbling world oil prices which cast doubt over the company’s oil and gas aspirations, Place increased its cash flow by 67 1/2 % to $1,453,992 during 1986.

The company reported net income of $487,496 or 67 cents per share for the year ended Dec 31, 1986, compared with $317,941 or 55 cents during the same period last year.

Revenue from the company’s oil, gas and mineral projects was $2,997,667 for the year, up from $2,704,713 in 1985.

Place’s performance left Chairman Michael Butler in an optimistic mood at the company’s sparcely attended annual meeting.

“We can’t necessarily promise you a rose garden but we already have a few good bloomers (in the company’s portfolio of oil and mineral properties),” he said.

Aggregate natural gas production for 1986 from the Place wells, including one-half the production for those jointly owned with Mitchell Energy, was 556,688 thousand cu ft, up by 7.6% from 1985.

Gross revenue from the wells was $2,043,479, $147,020 higher than last year. During 1986, the company arranged a farm-in from Pembina Exploration of a large block of 16,517 undrilled acres of leases on Long Point, close to the company’s Port Dover, Ont., field.

Under an agreement with Pembina Exploration, Place will earn a 100% interest in production from this acreage by drilling and testing for new wells.

Place shares were trading recently on the Toronto Stock Exchange at $1.49, just below its 52-week high of $1.75 but well above its 92 cents low point.