Crew signs Philippine deal (February 21, 2005)

U.K.-based Crew Gold (CRU-T) has inked a joint-venture deal with several local companies to acquire a 72.5% stake in Philippines-based Apex Mining for US$7 million in cash. Crew expects to wrap up the transaction in no more than four months, subject to satisfactory due diligence.

Apex’s key asset is the mothballed Masara gold mine on Mindanao Island. The small underground mine closed in early 2000, though the processing plant is reportedly in good working condition.

Masara has a reserve of up to 600,000 tonnes grading 10 grams gold per tonne, according to the Philippine Bureau of Mines and Geosciences (MGB). There is also an indicated reserve of 1.9 million oz. gold at similar grades. Neither estimate is compliant with National Instrument 43-101 standards, though Crew plans to remedy this.

Plans call for the “relatively quick” reactivation of the mine, and the rehabilitation and expansion of the existing 1,200-tonne-per-day processing plant. The company will also try to define more resources in the surrounding area. The 50-sq.-km property has seen little exploration below and outside the current underground development.

Gold mineralization is hosted by a series of epithermal veins, which have been mined to shallow depths. The system remains open at depth and along strike. The property also hosts copper-gold porphyry mineralization, with several deposits identified by drilling. The MGB suggests that these porphyry deposits have a potential, JORC-compliant indicated resource of 85 million tonnes grading 0.4% copper and 0.4 gram gold per tonne.

Elsewhere on the island, 200 km south of Manila, Crew owns the Mindoro nickel-laterite project. In March 2004, the president’s office revoked a previous cancellation of Crew’s minerals production sharing agreement for the project. Global resources reportedly exceed 200 million tonnes. Crew also owns the Pamplona sulphur deposit on Negros Island, where measured and indicated resources total 84 million tonnes averaging 13.8% elemental sulphur and 17% sulphur as sulphide.

Crew ended the last three months of 2004 with a net loss of $4.3 million, compared with a year-earlier profit of $600,000. In the final half of the year, the loss totalled $4.7 million, compared with a loss of $300,000 in the July-to-December period of 2003. The losses are mostly attributed to interest and finance charges related to bond financing and the conversion of around 22.3 million convertible bonds in October.