Wharf acquiring stake in Reward mine (May 25, 1992)

The chairman of Wharf Resources (TSE) says the company had an outstanding year in 1991.

“Production is up, costs are down and potential for the property is excellent,” Robert McEwen said. “Negotiations are also now completed and will see the acquisition of a 60% interest in the adjacent Golden Reward mine.” Wharf has operated a heap-leach operation in the Black Hills of Dakota since 1983. From that time to the end of 1991, gold production has totalled 414,000 oz. Production was an all-time high of 93,569 oz. in 1991, recovered from 3.28 million tons of ore grading 0.037 oz. gold per ton. The operating cost was US$209 per oz. Total cost, including royalties and non-cash expenses, was US$296 per oz.

Estimates for 1992 include an increase in tons mined to 3.5 million tons for a recovery of 94,000 oz. gold. Cash costs are estimated at US$190 per oz. for the year. First-quarter costs of US$187 were announced at the meeting. Proven, probable and possible reserves are 30.8 million tons containing an estimated 1.02 million oz. gold.

Wharf, MinVen (TSE) and United Coin (TSE) have entered into an agreement in respect of the adjacent Golden Reward mine. Under the terms of the settlement, MinVen will sell a 60% interest in the mine to Wharf for US$21.3 million. Wharf will cover the purchase price by assuming 60% of the Golden Reward liabilities and paying the balance in cash. Wharf has also agreed to lend MinVen US$2 million for a term of three years, secured by MinVen’s 40% interest in Golden Reward.

MinVen, which will retain a 40% interest in the mine, will use the cash to fund a plan of arrangement for creditors and shareholders of United Coin as follows:

— Secured creditors of United Coin and its subsidiaries will have their claims paid in full

— Unsecured creditors will receive an aggregate of 6.25 million shares of MinVen and 3.13 million warrants to purchase common shares at 75 cents per share for a 2-year period.

— Common shareholders will receive an aggregate of three million MinVen common shares.

Golden Reward is an open pit mine expected to produce 65,000 oz. gold this year. By 1994, the mine is scheduled to produce at an annual rate of 80,000 oz.