Gateford, Corona set up new company for chromium search

Other major shareholders of Canchrome include Corona Corp. (TSE), along with banker DCC Equities, and Montreal-based Corpomin Management.

Gateford has granted Canchrome an option to earn a 90% interest in two of its chromite properties in Quebec. The deal calls for the latter company to spend $3 million on exploration over 3 1/2 years, as well as issue 1.1 million Canchrome shares to Gateford along with $300,000 in cash payments.

Merchant banker DCC Equities will arrange all required funding and the financial structuring of Canchrome during its formative phase, including taking the junior company public in the spring of 1990.

Corona will grant Canchrome an option on four of its chromite prospects as well, all of which are on the west coast of Newfoundland. Under terms of the agreement, Canchrome can earn a 50% interest in the Corona properties by spending $2 million on exploration over three years and issuing 700,000 shares to Corona. A cash payment of $50,000 is also part of the deal.

Corona, in addition to managing the Newfoundland exploration programs, will have an option to earn a 49% direct interest in the chromite properties optioned by Canchrome from Gateford. That interest can be earned if Corona pays 100% of the costs required to bring either of the Gateford properties into production.

The main uses for chromium are in the stainless steel and alloyed steel industries. According to the federal department of Energy Mines and Resources, Canada has not produced chromium ferroalloys since World War II because domestic ore grades were too low to permit economic upgrading. All Canadian users of Chromium ferroalloys depend on imports. Currently about two-thirds of Canada’s needs come from South Africa.

The international price for chrome has increased in the past 18 months to 98 cents (US) per lb from 38 cents , and is forecast to remain at this level.

In other news, Gateford recently completed a $1.25-million acquisition of a hydrocarbon exploration database owned by the Canadian Institute of Formation Evaluation (CIFE), a private Calgary-based company.

]]>