Curragh seeks interest in American Pacific Mining

Toronto-based Curragh Resources, a private company which owns and operates the Faro lead and zinc mine in the Yukon Territory, has declared its intent to acquire an interest in American Pacific Mining (VSE).

A letter of intent signed by the two companies gives Curragh 60 days to carry out a review of American Pacific’s operations, including its producing base metal mine in Honduras. The company also has several base metal situations in the United States, and is exploring for gold and base metals on claim groups in Papua New Guinea.

Kurt Forgaard, president of Curragh, joined American Pacific’s board and a senior engineering executive from Curragh’s staff will be working with American Pacific’s management on an interim basis for the two month review period. Forgaard told The Northern Miner the level of interest the company will seek to acquire in American Pacific “has yet to be determined” and will depend upon the review. He said the company is also looking at several other situations outside Canada.

Asked if Curragh was interested primarily in American Pacific’s base metal projects, Forgaard said the company was interested in all the company’s holdings, including its gold prospects in Papua New Guinea. If a deal is made, it would represent Curragh’s first exposure to projects where gold is the principle commodity of interest.

Curragh and American Pacific will have a lot in common. Both were formed to acquire base metal operations closed by previous operators, and both were able to turn them into profitable operations. In the case of Curragh, the company turned around the huge Faro mine once operated by Cyprus Anvil Mining Corp., while in late 1987 American Pacific acquired the smaller El Mochito mine closed earlier that year by an Amax Inc. subsidiary. The company agreed to pay $12 million(US) for the mine, which it reopened after the Honduran government agreed to reduce onerous taxes, royalties, power costs and labor demands.

El Mochito is now producing lead, zinc, silver and copper from about 2,000 tons of ore per day. The company is also bullish on the gold potential of Papua New Guinea and has discussed with government officials there the possibility of building a smelter on the island to reduce costs and enhance recoveries for a variety of projects, including those with metallurgically complex gold ores.