Jascan, Atlantic get $40 million for Noxon share

Half a year ago Jascan Resources and Atlantic Goldfields each invested $3.5 million in order to earn a 45% interest in the Noxon silver-copper deposit in Montana (N.M., Feb 8/88). Now they’ve reached a deal to sell that interest for $40 million (all figures are in U.S. dollars).

The deal is conditional on completing a related transaction which Jascan President Will Felderhof would not comment on, and only $25 million of the selling price is in cash. Still, that’s not a bad return for two junior Canadian exploration companies.

If the deal goes through, it could take up to six months to complete.

The $15-million balance of the purchase price not paid in cash will be in the form of income bonds. Payments on principal of the income bonds will total $1 million per year starting two years after the start of production from the project. Interest on the bonds will be calculated at 9% per year starting six months after the start of production. A tentative production date of 1991 has been set for the project. U.S. Borax and Chemical holds a 55% interest in the property and is operator. There is some speculation that Borax, a wholly- owned subsidiary of Rio Tinto Zinc of London, may want to sell its interest in the property as well.

If so, it would appear to have little to do with the nature of the deposit itself. Reserves on the property have doubled since Jascan and Atlantic acquired their interest in the property, and the deposit has not been fully delineated. Drill- indicated and inferred reserves on the property currently stand at 142 million tons grading 2.10 oz silver and 0.78% copper in a 30-ft-thick, stratabound formation. That is bigger and richer than either of Asarco’s two deposits in the area, one of which has been in production for the past five years.

Buying the Jascan-Atlantic interest is a company called Montana Reserves of Spokane, Wash. It is owned equally by two individuals: Frank Duval of Spokane, who was involved with Pegasus Gold during its formative years, and H. F. Magnuson of Wallace, Idaho. Duval is well- known as an entrepreneur focusing on the Spokane Stock Exchange, and there is some speculation that the ultimate nature of the deal to buy the Noxon property has yet to be made public.