World Wide acquires Dafang prospect

Libra Gold, the exploration subsidiary of World Wide Minerals (WWSS-C), has acquired Princess Resources‘ (PRL-V) 51% interest in the Dafang gold-silver project in China’s Hunan province.

World Wide’s Chinese portfolio already includes a 60% interest in the Dexing gold project in Jiangxi province and a 55% stake in the Tongshi gold project in Shandong province.

Under the new deal, Libra will buy US$2.5 million worth of Princess’s 14% convertible secured debentures, which are held by one of Princess’s major creditors — London-listed Arcon International Resources. Libra will also grant Arcon a 0.67% net smelter return royalty (NSR). The World Wide subsidiary will then acquire Princess’s direct interest in Dafang by repaying US$1.2 million of Princess’s debentures and granting the company a 0.33% NSR.

Arcon has a right of first refusal to earn half of Libra’s interest in Dafang and develop a base metal mine there. Should Arcon choose to exercise this right, it must produce a bankable feasibility study and finance construction of a base metal mine.

In 1997 and 1998, London-based Princess spent US$3.5 million exploring three projects in China — Dafang, Longxingzai and Ou Chong — as part of the Xinxiang joint-venture project, undertaken with a subsidiary of the Hunan Non-Ferrous Metal Exploration Bureau.

Princess’s Chinese partner had previously estimated inferred resources at Dafang of 48.9 million tonnes grading 2.2 grams gold and 104.3 grams silver per tonne. The estimate was based on 11,000 metres of diamond drilling and a cutoff grade of 0.2 gram gold.

Princess carried out a 22,500-metre program of confirmatory reverse-circulation and diamond drilling. The work reduced resources to 15 million tonnes grading 1.23 grams gold and 46 grams silver based on a cutoff of 0.4 gram gold.

Dafang is a skarn deposit associated with a porphyritic intrusive rock. Bottle-roll tests have indicated a recovery rate of 95% for gold.

Princess is reportedly the first foreign company to have been granted a gold exploration licence in China. However, the company began to unravel in November 1998, when Arcon decided not convert its debentures into Princess shares and demanded that Princess repay US$3 million by January 1999 as well as pay interest at a 13% annual rate.

In June 1999, the British Columbia Securities Commission placed a cease trade order (still in effect) on Princess shares after the company repeatedly failed to file quarterly reports. In its last quarterly report, for the period ending July 31, 1998, Princess had racked up a deficit of $18.4 million.

In April 1999, Princess sold its interests in four exploration licences in Zambia and six exploration licences in Tanzania to Arcon for US$1.4 million. At the time of that deal, Princess still owed Arcon US$3.8 million.