MRI adding to oil and gas reserves

It appears that Mineral Resources International (TSE) will be adding significantly to its oil and gas reserves, thanks to an imminent $36-million takeover of Lethbridge, Alta.-based Barons Oil.

The MRI offer of $4.25 a share for all of Barons’ 7.9 million shares outstanding is dependent of 50% of Barons’ common shares being tendered.

MRI, the mining arm of Conwest Exploration Co. of Toronto, produced 660 barrels of oil a day in the second quarter. This will increase to 1,660 barrels if the takeover wins final approval. Also, MRI would be adding 5 1/2 million barrels or crude oil to its current reserves of 2.6 million barrels of oil and gas.

“Likely, the oil and gas assets that MRI has will be tranferred into Barons,” Nanisivik Mines President Graham Farquharson tells The Northern Miner. “This would make Barons a much bigger oil and gas producer, with MRI having a majority position in the company.”

“MRI has had these oil and gas assets for a considerable time and there has been very little value reflected in the stock as a result,” says Colin Coolican, executive vice- president of Conwest. “We hope that a deal with Barons will result in MRI getting more recognition for its oil and gas assets, in addition to the recognition it gets for its zinc production.”

Nanisivik’s parent company is MRI, which owns a 2,000-ton-per- day zinc/lead/silver mine on Baffin Island, N.W.T. The mine was formerly owned by Nanisivik but was bought out completely by MRI in 1986, with Nanisivik retaining operating control.

“It seems to be the right deal at the right time,” Farquharson added. “Putting the two companies’ oil and gas assets together under one roof seems to be a very good fit.”

Barons’ major holding is a 50% interest in six wells, each producing 316 barrels of oil per day, near North Taber, Alta.

MRI’s major producing properties are its interests in the Medicine River Glauconite A Unit No 4, in central Alberta, and in the Browning and Skinner Lake areas of southern Saskatchewan.