Northgate, Audrey team up to expand Mobrun operation

Toronto-based Northgate Explorations (TSE) has dipped into its treasury for the fourth time this year to pick up a 20% interest in Audrey Resources (TSE) of Rouyn- Noranda, Que.

Under an agreement, Northgate is spending $6.1 million to acquire 1,579,155 treasury shares and 140,845 flow-through common shares from Audrey at $3.55 per share.

Northgate will also acquire an additional 230,000 Audrey shares in a private transaction. The agreement, is part of Northgate’s plan to reinvest the $160 million it gained from the sale of its two Chibougamau, Que., gold copper mines to Australia-based Western Mining Corp.

It follows similar deals in which the Toronto company acquired a 13% equity stake in Toronto-based Campbell Resources (TSE), a 20% interest in Chelsea Resources (VSE) of Vancouver and a 15% stake in Geddes Resources (TSE).

The Audrey acquisition gives Northgate an interest in the Mobrun polymetallic mine and some recently discovered massive sulphide deposits near Rouyn Noranda.

After underground operations began in September, Audrey (70%) and partner Minnova Inc. (TSE) (30%) produced 1.4 million lb copper, 2.6 million lb zinc, 16,615 oz silver and 3,684 oz gold during the recent third quarter.

With 1.2 million tons grading 0.71% copper, 2.56% zinc, 0.91 oz silver and 0.075 oz gold per ton in the main Mobrun lens, operator Audrey recently completed an underground program designed to access the orebody.

Since an additional 237,683 million tons (including 0.306 oz gold) in three massive sulphide lenses was discovered recently near the Mobrun mine workings, Audrey President Guy Hebert has been involved in negotiations to raise $17 million for a 1,000-ton-per-day on- site mill.

Now that Northgate has agreed to invest in his company, Hebert will meet with representatives from a number of Toronto and New York banks to discuss terms for a $20- million gold loan. “We will choose which bank to go with within the next two weeks,” said Hebert.

A $2-million grant from the Quebec government will also assist Audrey with its mine development plans.

“They are a new company with an aggressive and professional mining team,” said Northgate President John Kearney who will appoint two delegates to the Audrey board of directors.

“The investment gives us exposure to an area where we had none previously and the money will be spent to enhance the value of the property,” he said.

Construction of the Mobrun mill is scheduled to begin next month (May).