Belmoral selling Astoria stake, 40% of Yorbeau for $5 million

Cash-strapped Belmoral Mines (TSE) has agreed to sell its 50% stake in the Astoria gold property near Rouyn-Noranda, Que., to joint venture partner Yorbeau Resources (TSE). Belmoral is attempting to pay off short-term debts of $9 million. It is also selling its 40.4% stake in Yorbeau to two private companies, one of which is affiliated with Corona (TSE).

On July 16, DCC Equities said it had acquired 4.6 million Yorbeau Class A shares, representing a 20.2% interest for $1 million. Three days earlier, Feejay Corp. Canada acquired 4.5 million Yorbeau Class A shares (20.2%) for $1 million. The average price being paid by Feejay and DCC Equities — both represented on the Yorbeau board — is 22 cents a share.

Neil Raymond, a director and shareholder of Yorbeau, is vice- president of investments and a shareholder of privately owned Feejay. Richard Renaud, also a director and shareholder of Yorbeau, is vice-chairman of Dundee Capital (TSE), which in turn controls DCC Equities. Corona owns approximately 4% of DCC and 10% of Dundee Capital.

Pending regulatory approval, Belmoral will also receive $3 million for its interest in the Astoria project which has yielded some encouraging results at depth.

While reserves stand at 1.4 million tons of grade 0.18 oz. gold per ton, that figure is expected to increase as underground exploration results, particularly in the higher-grade AW zone, are added up.

As Belmoral has spent close to $9 million to earn its interest in Astoria, a source close to both companies said he is surprised that it did not receive more for the project.

The mining executive, who asked not to be identified, is also questioning the price to be paid for Belmoral’s stake in Yorbeau, particularly as Belmoral bought 6.2 million of those shares two years ago for 70 cents. As part of that transaction, Belmoral also bought 6.2 million share purchase warrants for 62.5 cents each and 2.9 million shares from private investors for just over $2 million.

However, Belmoral President Gordon Strasser said he has negotiated the best price that can be obtained for the assets at the moment. “What we have received is what the market is prepared to pay,” he said. Shares of Yorbeau traded recently at 31 cents.

In a separate deal, Belmoral has agreed to sell its stake in the Gordon Lake gold property in the Northwest Territories to Northern Minerals (TSE) for $180,000. Northern had the option to earn a 60% stake in the property by spending $800,000 by 1993.

DCC and Feejay say the Yorbeau shares are being purchased for investment purposes only and both companies say they have no intention of increasing their stake in Yorbeau.