Olympus boosts stake in Phuoc Son

Shares in Olympus Pacific Minerals (OYM-V) dropped nearly 10% in early trading in Vancouver on March 1 after the company announced an all-share deal to boost its stake in the Phuoc Son gold project in central Vietnam.

Under the deal, Olympus will acquire Ivanhoe Mines‘ (IVN-T) 32.64% stake in New Vietnam Mining (NVM), which holds an 85% interest in Phuoc Son, in return for almost 10.3 million shares at a deemed price of 67 apiece. The junior will also issue some 3.2 million shares to New Zealand-based investment company Zedex in exchange for its 10.18% interest in NVM.

In the end, Olympus will have an 85% stake in Phuoc Son, with the balance held by government-controlled Mien Trung Industrial. At the same time, Ivanhoe’s stake in Olympus will nearly double to 19.93%, and Zedex’s interest will climb to 17.9% from 16.94%.

The agreement will also see Ivanhoe and Zedex each nominate two directors to Olympus’s board. The directors will remain on the board as long as the nominating company has at least a 15% stake in Olympus. If either company’s stake drops below 15% but remains above 10%, it will retain just one director on Olympus’s board; board representation is revoked at any shareholding below 10%.

The latest deal replaces one in 2002 that called for Olympus to acquire a 10.18% interest in NVM from each of Ivanhoe and Zedex. The new agreement has yet to be approved by regulators and shareholders.

A recently tabled independent measured and indicated resource estimate for the Bai Dat and Bai Go zones at Phuoc Son amounts to 318,000 tonnes grading 14.32 grams gold per tonne, based on a cutoff grade of 4.5 grams gold. An additional 188,000 tonnes averaging 12.12 grams gold are classified as inferred resources (T.N.M., Feb. 9-15/04).