Asia Minerals sets sights on Copperstone

Vancouver — Asia Minerals (AMP-V) is endeavouring to acquire the remaining 75% interest in the Copperstone joint venture in western Arizona. The vendor is Arctic Precious Metals, a wholly owned subsidiary of bankrupt Royal Oak Mines.

Arctic has been subject to bankruptcy proceedings since April, and an interim receiver, PricewaterhouseCoopers, has been appointed to negotiate the agreement with Asia Minerals. Financial aspects of the deal have not been disclosed.

Asia Minerals and Arctic Precious Metals formed the Copperstone joint venture in August 1998. Asia purchased an undivided 25% interest in the property and acquired the right to earn up to 80% through property and cash payments totalling US$4 million. To date, Asia has spent US$558,000 exploring the property.

In February, MRDI Canada completed a scoping study of an underground mine at the C and D zones, north of the old Cyprus Minerals open pit. The C and D zones are estimated to contain an undiluted, uncapped geological resource of 2 million tons grading 0.58 oz. gold per ton, equivalent to 1.2 million contained ounces. The capped resource is estimated at 0.34 oz. per ton, or 708,900 contained ounces.

The MRDI study envisages daily production of 520 tons from a resource of 827,400 tonnes grading 0.55 oz per ton. Capital costs are estimated at US$22.54 million, whereas operating costs are pegged at US$74.52 per ton of ore processed.

Based on a gold price of US$300 per oz., the project has an internal rate-of-return of 45% and a net present value of US$18.2 million. The cash cost of production is estimated at US$149 per oz.

Based on these numbers, MRDI recommends Asia Minerals proceed with a full feasibility study to determine the viability of a new Copperstone underground mine. The study would include surface and underground drilling to define and expand reserves.

Asia Minerals has engaged Canaccord Capital to arrange equity financing for the continued exploration and development of the Copperstone property.

In related news, Asia Minerals President David Owens has exercised his right of first refusal to buy 12.3 million Asia Mineral shares from Royal Oak Mines through his privately held numbered company.

According to the agreement, the private company, 426531 BC, will assign to a group of private investors all its rights to acquire the shares. The shares, valued at an aggregate price of $1.2 million, are currently held by PricewaterhouseCoopers.

Each investor will hold shares valued in excess of $97,000. However, no individual will own greater than 10% of the issued and outstanding shares of Asia Pacific and at no time will 426531 BC hold the legal or beneficial interest in the shares.

The agreement is still subject to a number of conditions, including court approval in the Ontario bankruptcy proceedings for Royal Oak.