Cliff, Canaustra merger given vote of approval

An expanded and newly financed Cliff Resources (TSE) is the result of a recent amalgamation of that company with Canaustra Gold Exploration (VSE). A majority of shareholders in both companies voted their approval at separate Toronto meetings for the amalgamation plan. Cliff shareholders will receive one new share for each old share. Canaustra shareholders will receive three-quarters of a new share for each old share.

At the Cliff meeting, shareholder approval was also given for the issuance of 20 million shares at a minimum price of $1 per share, to allow the company to acquire an asbestos mine (the former Advocate mine) at Baie Verte, Nfld. Owner of the property is a numbered company; Cliff will purchase the numbered company in return for the issuance of 20 million shares to the latter’s shareholders.

Cliff plans to use new technology, known as “wet process” and developed in Australia, to treat an estimated 30 million tonnes of asbestos tailings at the Baie Verte mine. Cliff hopes to produce asbestos fibre pellets at a rate of about 50,000 tonnes per year. Asbestos fibre

The company sees growing demand for asbestos fibre coming mainly from the Far East.

“No replacement has yet been found for asbestos in the manu- facture and reinforcement of cement transite pipe,” said James Bates, the current Cliff president who will become vice-president of the amalgamated company.

“I don’t know of any other mineral commodity that has similar growth potential. We can sell more product than we can produce.”

To illustrate the revenue-producing potential of the Baie Verte tailings treatment scheme, Gary Last, current Cliff chairman who will become deputy chairman of the amalgamated company, used the analogy of a 50,000-oz-per-year gold mining operation.

Last estimated about 50,000 tonnes of asbestos fibre pellets will be produced annually at the Baie Verte mine using the wet process. At a production cost of about $200 per tonne, the asbestos fibre pellets will fetch a price of about $420 per tonne.

“This could be considered as equivalent to a 50,000-oz- per-year gold mine,” he said.

Cliff’s big challenge for 1989 will be to get the wet process plant at Baie Verte up and running.

“We have the wet process and we would like eventually to build sim- ilar plants all over the world,” he said.

Capital costs for the plant are estimated at $16 million with the Newfoundland government putting up about two-thirds of that in the form of various grants and loan guarantees. The remainder of the costs will be covered by private funding. Newfoundland prospects

Cliff will also continue working on five of Canaustra’s exploration properties located on the Baie Verte peninsula. A $300,000 program involving geophysics and drilling is scheduled to commence in January on the company’s Gull Pond property, a polymetallic prospect. Funds for the exploration program are to be raised through a private placement.

In Nevada, Cliff is currently engaged in the production of gold from the Green Hill mine. As of Oct 31, the mine had not achieved its designed capacity of 20,000 oz of gold per year and is currently producing 400-800 oz per month.

Prior to the amalgamation, Canaustra had a 100% interest in the Green Hill placer project, subject to a 10% carried interest by Cliff. Canaustra first bought a 50% stake in the mine from Cliff in 1987, and acquired the remaining 50% last October.

The company is also planning to conduct further exploration on its Gold Canyon property, a placer gold bet, also located in Nevada. The latter property was acquired in August from Gold Bug Mining Inc.

President of amalgamated Cliff will be Michael Carter.

The new company plans to retire $15 million of outstanding debt by issuing non-interest-bearing promissory notes convertible into common shares.