Cash-hungry Mingold finds partner

At first glance, the recent marriage of a private Toronto company called Mingold Resources with tse-listed Golden Range Resources looks like any other back- door acquisition agreement.

In need of cash to speed up exploration at two of its Manitoba properties, Mingold seems to have found the perfect partner in Golden Range. But the union of the two companies has not occurred in isolation. It is part of a much grander design involving New York- based Inspiration Resources and Minorco of Luxembourg.

A diversified natural resources company whose subsidiaries include Hudson Bay Mining and Smelting and Inspiration Consolidated Copper, Inspiration recently formed a partnership with Minorco to expand its North American gold assets.

Based in Luxembourg, Minorco is a public company with interests in gold and natural resources.

With $160 million in the kitty, the new company, “Western Gold Exploration and Mining Co. Ltd. Partnership” (Westgold) was launched Jan 1. While Westgold already holds an offshore placer mining project near Nome, Alaska and a 72.5% interest in the Austin mine and mill in Nevada, it hopes to boost its gold production from 65,000 oz in 1987 to 200,000 oz by the early 1990s. Development programs

Funded by Minorco, the new company plans to spend more than $12 million(US) on exploration and development programs in 1988. Westgold also expects to add the assets of 100%-owned subsidiary Mingold Resources to its portfolio.

Following the back door acquisition deal with Golden Range, Mingold’s assets could include a 50.1% controlling interest in the junior exploration company. Under the agreement, Golden Range has acquired 100% of Mingold’s interest in 12 mining properties including the Hudvan polymetallic property near Flin Flon, Man.

In addition to providing $3 million for exploration of the properties, and issuing Mingold three million shares of its capital stock, Golden Range has granted Mingold the option to acquire up to a 50.1% controlling interest.

Mingold can achieve that by acquiring one million Golden Range shares at $1.50 per share, an additional one million shares at $2.50 per share and one million shares at $3.50 exercisable up to Sept 1, 1990.

Under an anti-dilution clause, Mingold can acquire treasury shares of Golden Range to maintain a controlling interest.

“Mingold had a collection of properties that they thought had value but no access to the flow- through market,” said Golden Range President Peter Hunkin. Ambay Services

Incorporated in 1985 to explore and develop a number of Canadian gold properties, Mingold is 50%- owned by Inspiration Resources’ subsidiary, Hudson Bay Gold Inc. Toronto-based holding company, Ambay Services holds the remaining 50% interest.

With President Ed Thompson and vice-president Peter Martin in control, Mingold is currently evaluating a feasibility study on the 45%-owned Farley Lake gold project 25 miles east of Lynn Lake, Man., where geological open pit reserves are estimated at 1.4 million tons of 0.2 oz gold per ton.

According to Martin, further exploration is being conducted before any production date is set. Manitoba Minerals, the Manitoba government’s exploration arm, holds the remaining 55% interest at Farley Lake.

Located throughout Manitoba and Saskatchewan, Mingold’s other interests include a couple of prospects called the Hudvan property 30 miles northeast of Flin Flon and the Manson Bay property which is also in the same area.

Immediate plans for the Hudvan polymetallic prospect, which hosts two zones with approximately 250,000 tons in each, include driving a 5,000 ft decline ramp down to No 3 and No 1C zones.

According to Martin, reserves in Zone 3 stand at 284,198 tons grading 0.067 oz gold (cut) 0.40 oz silver, 1.15% copper 2.3% zinc. Hudvan Reserves

Reserves in zone 1C are 239,569 tons grading 0.20 oz gold (cut), 0.56 oz silver, 2.14% copper and 2.7% zinc.

“Initially we will spend $3 million to the end of June and another $2 million later on,” said Hunkin. That will include spending $1 million on a 8,000-ft diamond drill program,” he said.

A 4-mile winter access road has already been completed.

A former exploration contractor in Timmins, Ont. Hunkin met Thompson and Martin when Golden Range was involved with Hudson Bay Exploration in a joint venture gold property at Pic Twp. near Hemlo, Ont. The project eventually came to nothing.

“During a visit to Mingold’s downtown Toronto offices, Ed asked if I was interested in any of their properties,” said Hunkin. “I made a proposal and started raising money,” he said.

Before the Mingold agreement, Golden Range’s major shareholder was Agassiz Resources of Toronto which held a 29% interest.

As part of his fund raising activities, the Golden Range president recently completed a $1.9-million financing with mvp Exploration (1987) Ltd. Partnership. That has diluted Mingold’s interest to around 33% but they can buy themselves back to 50.1%,” he said. Manson Bay

According to Hunkin, the $1.9 million was spent on the Hudvan access road and a 34-hole diamond drill program at Manson Bay where anomalous gold values ranging from 0.04 oz gold to 0.68 oz gold were encountered along a 2,400 ft strike length.

Future plans include diamond drilling at Golden Range’s Hawkins gold property near Oba southwest of Hearst, Ont. A joint venture project on the 53-claim Michaud Twp. property east of Matheson, Ont., is also planned.

To this point, geophysical surveys and a test hole have been completed on the Michaud property, Hunkin says.

He is also planning to look at a silver-lead-zinc property in the Lardeau area of British Columbia where values as high as 285 oz silver, 76% lead, 20% zinc were encountered.

While sampling historical zones and examining some old adits and trenches. Hunkin says his company will go back in this summer to map the whole area and conduct a diamond drill program.