New strategy for Sharpe Energy

Managers of Sharpe Energy and Resources (VSE) outlined corporate strategy at a recent meeting in Toronto.

The company wants to increase production either by exploration, acquisition or equity investments in low-cost producers in North America. It recognizes that junior companies generally have to struggle to generate cash flow to fund exploration. With this in mind, Sharpe announced it has reached an agreement-in-principle to acquire a petroleum services company which operates in the Gulf Coast region of the U.S. The purchase price of the company is US$3.5 million, with US$1 million payable during the first quarter of 1994.

The petroleum services company is expected to make a profit of US$500,000 on revenues of US$16 million in 1993. Projected profits of US$1.2 million are expected on revenues of US$20 million.

Sharpe plans to use these profits to explore the Kady Gulch gold-silver-zinc and Madison Cty. gold properties, both in western Montana.

Madison is an open-pit, heap-leach deposit containing 16 million tons at 0.023 oz. gold per ton. Early production will be from 5.5 million tons averaging 0.032 oz. Preliminary mining permit studies indicate 16-22 months will be required to obtain final permits.

Kady Gulch will be drilled in 1994 to test its mineral potential. Revenue from the two Montana properties will be used to explore and develop a 60%-owned, Proterozoic, copper-gold property in Wisconsin and a wholly owned copper-zinc property in the Appalachian Mountains of West Virginia.