Redstone Res. boosts interest in Dominicana nickel producer

Toronto-based Redstone Resources (TSE) is increasing its interest in the Falconbridge Dominicana nickel operation in the Dominican Republic, shareholders were told at the annual meeting. The company will boost its 1% interest (acquired in late 1989) to 1.6% at an approximate cost of US$600,000, President David Harquail said. The nickel operation is owned by Falconbridge Ltd., which is jointly owned by Noranda (TSE) and Trelleborg, a Swedish company.

Harquail said the Dominican complex produced 69 million lb. nickel in 1989 at a cash operating cost below US$2 per lb. At current production rates, Redstone’s beneficial interest will exceed more than one million pounds nickel per year, he said; project reserves are good for 15 years’ production. Harquail said Redstone’s cost in acquiring the new interest works out to US$1.30 per annual pound of production.

Redstone’s corporate strategy is to acquire cash-generating interests in non-gold mining properties. Its two other interests are a 100% interest in the Coates copper deposit in the Northwest Territories and a 2% gross royalty interest in the Midwest uranium deposit in northern Saskatchewan.

Harquail said Redstone has yet to receive any money from the Dominican nickel operation, which reported 1989 earnings after taxes of US$97 million and which has been working to reduce its debt. Redstone’s first payment from Falconbridge Dominicana is expected later this year, he said.

Redstone is 40% owned by Franco-Nevada Mining (TSE), which along with affiliated company Euro-Nevada Mining (TSE) is involved in acquiring royalty interests in gold-mining properties. Both Franco-Nevada and Euro- Nevada staged their annual meetings immediately after the Redstone meeting.

The major asset of Franco- Nevada is its U.S. holdings of about 1,500 acres of royalty and net profit interest lands in the Carlin gold belt in Nevada operated by American Barrick Resources and encompassing the bulk of the huge Goldstrike project.

Earlier this year, Franco-Nevada acquired 620 acres adjacent to the Hemlo orebody in northern Ontario. The company views its wholly owned Hemlo property, which it says captures the down dip extension of the Golden Giant and Williams mines, as an investment for the future.

Euro-Nevada, with a portfolio of seven royalty properties, also has significant holdings in the Carlin camp. President Pierre Lassonde said three of the company’s royalty properties are currently in production and two more are scheduled to come on stream this year. Euro- Nevada recently raised $13.5 million through the issue of one million special warrants at $13.50 per special warrant.

At the Franco-Nevada meeting, shareholders approved a rights plan aimed at slowing any potential takeover bid.