Cambior buying control of Audrey

Growing gold producer Cambior (TSE) has made another move into the base metal side of the mining industry by agreeing to acquire a control position in Audrey Resources (TSE) of Rouyn-Noranda, Que., for $13 million.

Audrey is the operator of the Mobrun copper-zinc-silver-gold property northeast of Rouyn-Noranda, which has been in and out of production during the past five years.

Cambior has agreed to purchase 20 million new shares of Audrey at 65 cents per share, giving the former a 55% interest in Audrey. (The private placement is subject to regulatory and shareholder approval.) Cambior has also made offers to four Audrey shareholders to purchase their common shares of Audrey which, if accepted, would give Cambior an additional 10% interest in Audrey. Acceptance of the Cambior offer allows Audrey to pay off its more than US$12-million debt to Elders Finance Inc. “We’ve spent almost two years in search of financing for that project,” said Caroline Huynh, Audrey’s vice-president of investor relations, in reference to Mobrun. She added that Cambior was the first company to make a firm offer.

Audrey, which began production in 1987 with an open pit operation and then moved underground before shutting down the mine at the beginning of 1992, owns 100% of Mobrun’s surface installations and 50% of the mining property. Owner of the remaining 50% of the project is Minnova (TSE).

Terry Ortslan, an analyst with securities firm Loewen, Ondaatje, McCutcheon in Montreal, said the Audrey acquisition presents Cambior with two opportunities. “It offers an asset — a mill — and an upside which is the 1100 lens,” he said.

The relatively large 1100 lens sits below the 4850 level and is believed to offer excellent exploration and development potential.

Cambior announced recently it had acquired a 100% interest in the Polo Sur copper property in northern Chile. Last year, Cambior made a deal to acquire a company in the U.S. with copper prospects in Arizona, Idaho and Nevada. Shareholders of Audrey will vote Sept. 29 at a special meeting in Montreal on the deal. The board of directors of Audrey has approved the private placement and recommends that shareholders approve the placement. The board of directors of Cambior has also approved the share subscription. Audrey said Elders has agreed to reschedule the payment of outstanding loan amounts totalling US$12,072,000.