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At issue is the future of 12.2 million Asia Minerals shares and a 75% interest in the property owned by a subsidiary of Royal Oak, which went into receivership in April.
Two letters sent to receiver PriceWaterhouse Coopers by Asia Minerals President David Owens makes clear the company’s desire to buy back its shares from Royal Oak and the remaining 75% interest in Copperstone owned by Arctic Precious Metals. Asia Minerals had been earning a 25% interest, with an option for to increast this to 80%, from Arctic, and was acting as operator.
According to Owens, inaction by PriceWaterhouse Coopers on the undisclosed offers is impeding financing and development of the project, on which a feasibility study was due to begin. As a result, he says, work at Copperstone has stopped and most of its workforce laid off in order to free up cash to keep the Arizona property in good standing.
The letters sent to PriceWaterhouse Coopers outlined Asia Minerals’ deal with Arctic, signed in July 1998, and emphasized the company’s right of first refusal on both the share block and remaining interest in the property, should they put up for sale.
Depending on the nature of the deal, Asia Minerals can either buy the property unchallenged or submit an offer that matches that of any potential competitor.
At presstime, officials from Asia Minerals and PriceWaterhouse Coopers had not returned calls.
The relationship between the companies dates back to 1993, when Royal Oak bought a 40% interest in Asia Minerals, then exploring for gold in China. The partners conducted a prefeasibility study on the Yingezhuang gold property but dropped the project over bureaucratic tangles with the Chinese government. Over the years, Royal Oak increased its interest in the Vancouver-based firm to its current 44%.
The Copperstone property is one of Asia Minerals’ few active projects. A prefeasibility study completed there earlier this year concluded that the property could sustain a mine for five years at a rate of 157,000 oz. gold in the first year, and 72,000 oz. per year thereafter. Resources weigh in at 827,400 tons grading 0.555 oz. gold per tonne. Construction and development costs are estimated at US$22.5 million.
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