Cliff Resources, Canaustra Gold to merge

Toronto-based Cliff Resources (TSE) says it plans to merge with Canaustra Gold Exploration (VSE) and a numbered Ontario corporation, which owns 100% of Baie Verte Mines Inc.

The proposed merger would give Cliff a 100% interest in the expanding Baie Verte asbestos operation in Newfoundland and the Green Hill gold mine at Olinghouse, Nev.

Baie Verte is a private company based in Newfoundland and is a producer of chrysotile asbestos, a fibrous mineral used in asbestos- cement pipe, soundproof siding, and thermal insulation. World demand for chrysotile asbestos fibre is forecast to increase to about seven million tonnes per annum by the year 2000.

The Baie Verte mine plans to expand its annual production of the fibre from 80,000 tonnes to 100,000 tonnes pending finalization of funding agreements for a new $14 million wet processing plant.

James Bates, president of Cliff Resources, says that by using new technology known as wet processing, the company can produce asbestos fibre at a cost of about $190 a tonne.

Bates sees growth in demand for asbestos coming from Japan, Taiwan, India and Europe. “Since there has been such a scare over asbestos in North America no new mines have come into production. However, the U.S. Environmental Protection Agency (EPA) may be on the verge of reversing its decision to ban asbestos,” he said.

Canada is the non-communist world’s largest producer of asbestos but since 1979, production has declined dramatically and Quebec, where most of the Canadian industry is based, has felt most of the effects.

From a standing start less than two years ago, Cliff now operates the Green Hill gold mine in Nevada at an annual rate of 20,000 oz. The company’s objective is to produce 100,000 oz of gold annually by 1991. If the merger is approved by shareholders and regulators, Cliff’s gold exploration will be concentrated on properties in Nevada, California, Newfoundland and Ontario.

Canaustra is controlled by Mincom, an Australian public mining company which provided $4.5 million in financing for the Green Hill mining project in Nevada. Mincom has a mixed portfolio of precious metal properties in Ontario and Newfoundland. The company also developed the new wet process technology to be used at the Baie Verte asbestos mine.