Atlas Cromwell to buy Mount Milligan and other assets from Goldcorp

Vancouver – Atlas Cromwell (ACR.H-V) has agreed to buy interests in five mineral projects formerly held by Placer Dome, including the Mount Milligan copper-gold project situated 155 km northwest of Prince George, B.C., from Goldcorp (G-T, GG-N) in exchange for preferred shares valued at $120 million.

Goldcorp is still in the process of acquiring the properties from Barrick Gold (ABX-T, ABX-N), which acquired Placer Dome through a successful US$10.4-billion takeover bid announced late last year. As part of that deal, Goldcorp agreed to pay US$1.5 billion in cash for all of Placer Dome’s Canadian assets, including the Campbell gold mine adjacent to its Red Lake gold mine in the Red Lake camp of Ontario.

Along with Mt. Milligan, Atlas will acquire other British Columbia assets, including 51% of the Berg copper-molybdenum-silver deposit near Houston, and an option to earn at least 51% of three gold properties in the Toodoggone district from Stealth Minerals (SML-V).

The other assets are the Maze Lake gold project in Nunavut, and a residual interest in Howard’s Pass, a large zinc-lead-silver project controlled by Pacifica Resources (PAX-V) in the Yukon Territory. Atlas will also have a right of first offer on three gold properties in Ontario and Quebec, should Goldcorp decide to sell, option or joint-venture them.

Atlas plans to change its name to Terrane Metals once the proposed transaction is completed. Robert Pease, Placer Dome’s former head of Canadian exploration and global major projects, will take the helm as president. Jeffrey Franzen, Edward Farrauto, Douglas Leishman and John Reynolds, a former Member of Parliament and MLA for British Columbia, have also agreed to join the board.

The cornerstone asset of the company will be the Mount Milligan copper-gold deposit, which Placer Dome acquired in 1990 for $266 million from two previous owners. The company wrote-down its entire investment two years later when studies showed that the low-grade project would provide an “an insufficient return” to justify the $500-600-million capital investment required to develop the property.

Placer Dome had commissioned an up-dated pre-feasibility study that was nearing completion before Barrick announced its takeover bid, with much of the work focused on optimizing the processing flow-sheet in light of recent metallurgical advances. Robert Pease says the results were encouraging enough for the major to rebuff a series of offers from third parties hoping to acquire and revive Mount Milligan.

“There’s still more work to be done,” Pease adds, “but we are optimistic that we have an economic project at Mount Milligan, along with a nice mix of properties for a company coming out of the block.”

Mount Milligan hosts a measured and indicated resource totaling 205.9 million tonnes grading 0.6 gram gold per tonne and 0.247% copper, containing 3.7 million oz. gold and 1.12 billion pounds copper. The resource estimate is based on 194,467 metres of drilling in 911 holes.

Market reaction to the proposed transaction pushed shares of Atlas to $1.55 in active trading. The agreement between Atlas and Goldcorp is still subject to various conditions, including regulatory approvals and third-party consents, and the completion of a proposed non-brokered financing of 13.5 million units priced at $0.38 per unit, for gross proceeds of $5.13 million.

Goldcorp will have the right to convert the preferred shares into 240 million shares of Atlas at a price of $0.50 per share at any time. Assuming 100% conversion of the preferred shares, Goldcorp would hold an 82% equity interest in Atlas on an issued and outstanding basis, and a 76% equity interest on a fully diluted basis.