Rio Algom buys 22% stake in Vancouver gold company

In a bid to access some joint venture opportunities without dipping into a 1989 exploration budget of about $8.5 million, Rio Algom is spending $1.8 million to acquire a 21.8% interest in Vancouver-based Pan Orvana.

The Dec 30 share purchase agreement gives Rio Algom the right to participate in any future Pan Orvana equity issues in proportion to its interest in the company.

“The acquisition augments our exploration program, which was expanded in 1988,” said Rio Algom President Colin Macaulay. “Pan Orvana has properties which are currently at the early stages of the exploration and development cycle.”

They include the Cobb Creek property in Nevada’s Independence Mountain range where Pan Orvana has joint venture interests with BHP Utah in 20 square miles of exploration lands.

The partners have outlined a small surface deposit of 3 million tons grading 0.046 oz gold per ton in the McCaul Creek zone. “About 1.1 million tons of that is amenable to heap leaching,” said Pan Orvana’s chief operating officer Neil Hillhouse.

Under an agreement, Pan Orvana can earn a 60% interest in the McCaul Creek area where gold mineralization is fine grained and disseminated in nature.

The Vancouver company also holds the right to earn a 100% interest from Homestake Mining of San Francisco in another small gold deposit located about five miles from Libby, Mont.

After drilling 22 holes down to 500 ft, the joint venture has outlined 11 million tons of grade 0.03 oz. “The deposit has remarkable metallurgy,” said Hillhouse who was referring to the fact that gold mineralogy is oxidized all the way to the 500 ft level.

In addition, Pan Orvana has interests in central British Columbia’s Cariboo Gold Quartz region close to the site of a former gold producer called the Wells Barkerville mine.

The agreement with Rio Algom, gives the Toronto company the right to earn a 50% stake in any of the Pan Orvana properties by carrying the cost of a feasibility study. If Rio Algom wants to increase its interest above 50%, it must obtain Pan Orvana’s permission before doing so.

With about $1 million in working capital, Pan Orvana is planning to apply for a listing on the Vancouver Stock Exchange in April.

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