Aur buying majority stake in Canada Tungsten

With a view to expanding its mining portfolio, junior gold producer Aur Resources has arranged to buy 48.3% (or 14.4 million shares) of Canada Tungsten (TSE) from Cyprus Amax Minerals (NYSE).

Cyprus elected to sell its majority interest in Canada Tungsten earlier this year.

Cyprus will receive 6.3 million shares of Aur and $500,000 cash. It will also sell enough of the Aur shares to Teck (TSE) and/or Cominco (TSE) to allow each of the latter companies to maintain its existing 10% equity investment in Aur.

Upon completion of the transactions, Cyprus will hold a 9% stake in Aur. Cyprus is acquiring the shares for investment purposes and may not increase its holdings beyond this level without the consent of Aur.

Management of Aur and Canada Tungsten consider the share purchase to be the first step in a process that will lead to a merger of the two companies into a larger, financially strong entity. The new company will have two major long-life copper mines, ongoing gold production and a portfolio of properties in North America, Chile and Peru.

“We like the overall asset package, particularly the Andacollo property in Chile,” Peter McCarter, Aur’s senior vice-president, told The Northern Miner. Canada Tungsten holds a 70% interest in the Andacollo heap-leach copper project southeast of La Serena, Chile. A preliminary study estimates capital costs as being US$55 million, with startup scheduled for 1996. The operation, which is undergoing a feasibility study, will utilize solvent extraction-electrowinning to produce 37 million lb. of high-quality copper cathode per year. The operating cost would be US50 cents per lb. and, based on current reserves, the mine life is estimated to be 15 years. Other Canada Tungsten assets include cash resources in excess of $14 million, a half interest in the Aurora gold mine in Nevada, the Western world’s largest tungsten mining and concentrating facility, and the largest and highest-grade undeveloped tungsten property in the world.

It is expected that a merger proposal will be made to shareholders of Aur and Canada Tungsten following completion of the Andacollo feasibility study in late 1994.