Noranda in place to take control of Aur discovery

While the market waits for more drill results from Louvicourt Twp., where Aur has encountered high grade copper-zinc-gold mineralization over wide intersections in a previously unexplored horizon, Noranda has been making a number of behind-the-scenes moves which could give it control of the new discovery.

Noranda officials tend not to discuss market transactions made by the Toronto resources giant and Ontario securities regulations don’t require Noranda to make public disclosure of its activities until it has acquired a 9.9% stake in the companies it is buying into.

But The Northern Miner has been able to confirm, that on the week of June 19, Noranda bought approximately 400,000 Aur shares on the open market and that Canarim Investment Corp. of Toronto acted as the company’s agent. Officials connected with Noranda have also had discussions recently wit h a number of Switzerland- based holders of St. Genevieve Resources (ME) debentures, The Northern Miner has learned. St. Genevieve holds a 56% controlling stake in Louvem, which says it has a 50% interest in the Louvicourt discovery.

Acquired in August 1987, by Banque Indosuez of Geneva, the debentures are convertible into shares of St. Genevieve at $6.75 per share in 1992. Fully diluted, they would double the amount (currently about 15.4 million) of St. Genevieve shares already outstanding.

Analysts also believe that an unspecified number of the 7.8 million Aur, 19.2 million Louvem and 7.1 million St. Genevieve shares which have traded since the Louvicourt discovery was announced were acquired on behalf of Minnova Inc. (TSE) and Kerr Addison Mines (TSE) by various investment dealers around Toronto.

Minnova is a 50.2%-owned subsidiary of Kerr Addison which in turn is 50.1% owned by Noranda.

Since the discovery Louvem’s shares have climbed to $4.30 from 52 cents , Aur’s have risen to $8.38 from $3.00 and St. Genevieve’s to $2.15 from 82 cents .

Bruce Bone, Noranda’s vice- president and treasurer, declined to either confirm or deny that his company has been buying up shares of Aur. “We don’t comment on that kind of rumor,” he said.

According to Ron Coll, a mining analyst with Toronto investment dealer, McLean, McCarthy Ltd., the Aur investment is a logical one for Noranda to make.

“The Noranda smelter, located in Rouyn-Noranda, Que., about 90 km from the discovery area, is under-utilized and they need the feed,” he said. In 1988, the 850,000- ton facility was operating at 87% of capacity. “The best way to get more feed is to line up a copper-zinc deposit by gaining control of Aur and Louvem,” added Yorkton Securities base metals analyst Eric Zaunscherb. He predicts that the shares he says have been acquired by Kerr Addison and Minnova will eventually end up in Noranda’s hands.

Speculation on Toronto’s Bay Street district suggests that Noranda has already been offered joint venture status in the Louvicourt Twp. project in return for purchasing three million Aur shares at $10 each.

However, Aur Chairman Jim Gill denied that the offer had been made or that he had been turned down because of Noranda’s desire to be project operator in any future joint venture.

“But Noranda probably won’t attempt to gain control of the massive sulphide discovery, until it is sure that any potential legalities involving the Louvem and Aur are cleared up,” said Zaunscherb.

Noranda will wait to see if the partners can settle a dispute which arose earlier this year when Louvem allegedly defaulted on a $40,000 joint venture payment to Aur, Zaunscherb told The Northern Miner.

Aur says after Louvem failed to make the payment, the joint venture contract gave it the right to reduce Louvem’s stake in the project from 50% down to a 25% non- participating interest. Aur has agreed to allow two geologists from St. Genevieve and Louvem to look at the Louvicourt drill core. Otherwise there was little evidence that the companies are getting any closer to a settlement. “We firmly believe that we hold a 50% of the property and we are the operator if a decision is made to go underground,” said St. Genevieve Chairman Pierre Gauthier, who was attempting recently to reduce his company’s vulnerability to being taken over. Gauthier was also preparing for the annual meetings of Louvem and St. Genevieve which were scheduled to be held in Montreal, June 29. “If the dispute has to go to court, it will go to court, I can tell you that,” he said.

Aur President Jim Gill, meanwhile, was telling dealers and analysts at a meeting in the offices of Toronto-based Gordon Capital that he is planning to stick to the letter of the agreement. He says it prevents the defaulting partner from reverting back to 50%.

“What you have here is three parties who are trying to position themselves in a project that they all want to operate,” said Zaunscherb. He says they are waiting for results of the next three drill holes before deciding what to do next.

Scheduled to be released this week, the results could double the potential of a deposit that is already thought to contain 6.5 million tons of massive sulphides.

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