South Atlantic to develop copper project

By the end of February, South Atlantic expects to have closed the purchase of Union Copper, a subsidiary of Union Mines Inc., thereby gaining a 55% interest in the project in exchange for 1.25 million shares (plus an option for 750,000 shares at 90 cents ) and a $75,000(US) cash payment. Along with partner Continental Catalina Inc., Union Copper had spent about $25 million on development of the project since 1977.

The project has proven and probable reserves (using a 1.5% copper cut-off) of about four million tons grading 2.3% copper and 0.68 oz silver per ton. According to South Atlantic, these numbers represent geological reserves and do not take into account dilution or recoveries. With mine development substantially completed, the capital costs will be for construction of a mill and the balance of mine development.

Based on recent discussions with partner Continental Catalina, South Atlantic is to provide the funds necessary to place the project into production, with cash flow to be shared 95% by South Atlantic and 5% to Continental until 150% of the capital funds have been repaid. Thereafter, cash flow will be shared 88.75% to South Atlantic and 11.25% to Continental with a provision the latter receive 25% of incremental cash flow above a certain price of copper and depending upon the cash production costs per lb of copper.

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