INVESTMENT COMMENTARY — Investors advised to pursue promising junior

With the takeover of International Musto Resources (TSE) by Rio Algom and Australian-based North Ltd. all but complete, investors may be on the lookout for juniors exhibiting similar exploration potential. One conceivable candidate, according to C.M. Oliver & Company’s mining analyst, Jonathan Challis, is International Pursuit (TSE).

Not only is the company involved in a joint-venture agreement concerning a promising copper-gold porphyry deposit, but Challis contends the property exhibits a potential similar to that shown by Musto’s Baja de la Alumbrera deposit in Argentina, in its early stage.

In March, Pursuit entered a joint venture with Tequila Copper concerning the latter’s Hinoba-an deposit, which has since beeen rechristened Mina Don Jose. Situated 400 km south of Manila, on the Philippine island of Negros, the deposit is near the large Bulawan copper-gold deposit and several other copper mines with significant gold values.

In 1982, a feasibility study outlined a marginal copper sulphide deposit of 100 million tonnes averaging 0.45% copper, in addition to gold and molybdenum credits.

Pursuit can earn a half interest in the project by spending $10 million before March 31, 2000. Afterwards, it would have the right to acquire Tequila’s remaining half interest for $15 million, subject to a $15-million royalty on the underlying sulphide deposit.

Since 1982, and especially over the past two years, additional work has outlined another three coincident geophysical and geochemical anomalies. Challis believes Mina Don Jose has the potential to host more than 450 million tonnes of sulphide and oxide reserves.

Pursuit has six rigs stationed on the property, two of which are attempting to expand proven reserves and obtain data on the deposit’s gold, silver and molybdenum content.

A second stage of drilling will soon begin testing the large A1 anomaly, a few kilometers to the southwest. Previously, two earlier drill holes cut the edge of the anomaly and returned elevated copper values, while trenching returned values in excess of 1% copper over 250 metres.

A third stage of drilling, to begin in June, will concentrate on the A2 and A3 anomalies which are northwest and west, respectively, of Mina Don Jose.

Challis says the property could host in the neighborhood of 4.1 billion lb. of copper-equivalent, which would be equivalent to 57% of Musto’s share of reserves at Alumbrera.

He contends Pursuit could fund its exploration requirements by issuing an additional 10 million shares, thereby increasing the total number of outstanding shares to 27 million. He concludes that, at the same potential exit price per lb. as Musto’s, International Pursuit would have a market capitalization of $325 million, representing a share price of $12.

The analyst recommends Pursuit as a speculative buy and suggests the price could reach $5 within the next 12 months. Currently trading at the $2 level, the issue exhibits a 52-week high-low range of between 62 cents and $2.35.