Silvore Fox attracts Chinese investor

A Chinese group that invested heavily in Tanzania-focused gold explorer Canaco Resources (CAN-V) just before Canaco discovered the Handeni gold deposit has added to its large interest in Nova Scotia explorer Silvore Fox Minerals (SFX-V). 

Silvore sold 22.2 million units in a private placement at 9¢ each for proceeds of $2 million in late March, the majority of which were bought by Silvore insiders or companies related to them. China-based Beijing Donia Resources, the company’s largest shareholder, acquired 9.21 million units (which included a half-warrant exercisable at 15¢ for two years), adding to its 39.8 million shares.

The Chinese state-controlled company acquired most of its shares in early 2010 at 4¢; it acquired the rest later that year by exercising warrants at 10¢. Beijing Donia’s chairman, Jingbin Wang, then became Silvore’s chairman. 

Wang personally subscribed for 444,444 shares in the recent private placement while Silvore director Nianqing Zeng, a director of Beijing Donia’s parent company, bought 1 million shares, as did Silvore’s vice-president of exploration, Zhenquan Gao, also Beijing Donia’s vice-general manager.

The Chinese group’s earlier investment in Canaco followed a similar pattern. A sister company of Beijing Donia (of which Wang is also chairman) bought 32 million shares of Canaco at 5¢ in a private placement during the financial crisis in early 2009, appointing Wang a director. It also received 16 million warrants exercised a year later at 7¢ for a total investment of $2.72 million. Canaco’s shares hit an all-time high of $6.45 earlier this year, at which point the Chinese group’s shares were worth nearly $310 million. 

Last November, Silvore signed a partnership agreement with Beijing Donia, giving it access to contacts and projects around the world in exchange for a right to help develop any future mines. The agreement is already starting to pay off for Silvore: in February, it acquired a 100% interest in a past-producing copper-zinc project in Ontario, and in April, it penned a $10-million joint-venture deal for two grassroots copper projects in Madagascar.

The company’s shares have risen from 9¢ in April to a high of 23¢ following the announcement of the Madagascar agreement.

Silvore can earn 55% of the Madagascar projects by spending US$5.5 million on exploration over three years, paying US$4.5 million in cash or shares, and issuing 7.7 million shares over 30 months.

Besides being chairman of several companies, Wang holds a PhD in geology, is the president of the Beijing Institute of Geology for Mineral Resources, is chief scientist of the National Basic Research Program of China, and received China’s National Youth Expert for Outstanding Contribution award.

Silvore is based in Bedford, N.S., and has 140 million shares outstanding with roughly $3 million in working capital.