Rio confirms Kemess reserves (February 10, 1992)

A preliminary reserve calculation by Rio Algom (TSE) for the South Kemess property, 60% owned by El Condor Resources (VSE) and 40% owned by St. Philips Resources (VSE), has confirmed recent reserve estimates.

Rio, technical adviser to St. Philips, estimates preliminary reserves at about 240 million tons grading 0.22% copper and 0.018 oz. gold per ton. This compares with a recently released preliminary reserve estimate by El Condor of 252 million tons grading 0.23% copper and 0.019 oz. gold. Drilling to date on the South Kemess property in north-central British Columbia has outlined the extent of the porphyry copper-gold deposit on joint venture ground over an area measuring about 4,600 ft. east-west and 2,000 ft. north-south. The deposit is near-surface and flat-lying, measuring up to 800 ft. in thickness.

The joint venture recently approved a budget of $717,000 for the period between January and March, 1992. The work will include geostatistical studies and minable ore reserves calculations, open pit design work, metallurgical testing and environmental studies.

Rio Algom now holds about 2.1 million shares of St. Philips representing 27.3% of the company, and has committed to exercising an additional 259,286 share-purchase warrants at $2 each when the funds are required. Rio Algom can exercise additional options to bring its interest in the company up to just under 50%.

James Kermeen, a director of the company, noted that Rio’s purchase option includes an additional 1.3 million treasury shares at $3 plus one million shares at $4. Rio also has the right to buy 500,000 shares from insiders at $3 each expiring on May 15. Fully diluted, the company has 10.4 million shares outstanding and Kermeen noted that the deal with Rio includes a provision to use up to $1.5 million in treasury funds to re-purchase stock on the open market which would lower shares outstanding to just under 10 million. Rio Algom has an additional indirect interest in the property through a 12.6% (fully diluted) shareholding in El Condor Resources. El Condor has about 12.9 million shares outstanding on a fully diluted basis.

giant-Aurizon/Jan. 27/dw