Atlanta moves up on Newmont deal

As European investors moved to buy up shares of Vancouver-based gold explorer, Atlanta Gold (TSE), the issue has risen to $2.85 from its April 6 trading level of $1.26 on heavy volume.

Investors are betting on the outcome of an option agreement between Atlanta Gold and a unit of Newmont Mining (NYSE), which allows the latter to spend up to $10 million by 1995 on a 3,150-acre gold-silver property in Elmore, Idaho. To earn a 51% project interest, Newmont must also deliver $5 million in cash payments to the Vancouver company.

A phase-one program, including 15,000 ft. of reverse circulation drilling, is designed to target high-grade ore in quartz veins below two open pits, one of which contains 8.3 million tons of proven reserves grading 0.08 oz. gold and 0.24 oz. silver per ton. The other pit hosts 6.2 million tons of proven ore grading 0.049 oz. gold and 0.088 oz. silver.

The higher-grade material was intersected by five deep holes which outlined potential reserves of 170,000 tons of 0.382 oz. gold and 0.942 oz. silver at the 1,500-ft. level.

While a feasibility study conducted in 1989 says the open pit reserves could be mined profitably if gold was trading at US$379-400 per oz., Newmont is focusing its efforts on exploration and development of the project’s underground potential, said Atlanta spokesman Linda Weir.

If the US$550,000 phase-one program is deemed successful, Newmont will spend the same amount to conduct an additional 16,000 ft. of drilling. Should a proposed third exploration phase, including reserve delineation and project development, be completed, the two companies would embark on a joint venture.

Atlanta Gold’s 12.2 million issued shares are trading in an annual range of 30 cents and $3.10.

A management group led by President Olaf Tolpinrud recently fought off an attempt by a major shareholder to elect a new slate of directors. Shares of the company are currently being touted in Germany where Atlanta is listed on the Berlin over-the-counter system.