Oliver makes move

Vancouver — Sitting on over $5 million in cash since the sale of its Segala property in early 2000, Oliver Gold (OGO-V) has surprised many by proposing to merge with a private company that holds the rights to the Ona-Puma nickel laterite project in Brazil.

The junior is aiming to merge with Hasting Resource, a company led by the former management team of Sutton Resources. Sutton was acquired by Barrick Gold (ABX-T) in March of 1999 in a stock deal valued at $525 million.

Under the merger deal, Oliver would acquire all of the outstanding securities of Hastings. The agreement calls for Oliver to consolidate its shares on a 9.3 for 1 basis and then issue one new share for each Hastings share. Hastings’ principals will receive 5 million consolidated shares, 90% of which will be escrowed pending completion of the full acquisition of Hasting’s primary asset the Ona-Puma nickel laterite property in Brazil. In return, Hastings must issue between 775,000 and 1 million shares at $1.94 apiece before the merger.

Of interest to Oliver is Hastings’ binding letter agreement with Inco (N-T) to acquire a 100% interest in the Ona-Puma project. Under the deal, Hastings must raise at least US$22.5 million within 12 months of the signing a definitive deal with Inco. At the end of the day, Inco will receive no cash payments but hold an 18% stake in the merged company.

Worked by Inco in the 1970s, the Ona-Puma project covers 39,940 ha and hosts a near surface inferred resource of 50 million tonnes grading 2.3% nickel and 0.09% cobalt using a 1.5% nickel cut-off grade. About 25% of this resource lies within an indigenous reserve and may not be available for development.

Based on a 1997 scoping study, consulting firm Watts, Griffis and McOuat believes that the deposit could be exploited using conventional smelting technology. Based on a single-line pyrometallurgical process similar to that used by Inco in Indonesia, a throughput of 1.1 million tonnes of laterite annually, would yield 50 million lbs. of nickel matte yearly over a 20-year mine life.

Ona-Puma lies 150 km from rail facilities and about 100 km from major electrical power.

Hastings and Inco are currently finalizing the formal purchase and sale agreement, which will include an offtake agreement allowing Inco to purchase and market all the nickel matte produced. The major will also license its reduction smelting process for the project and will make available all necessary technical support for exploration, development and operation.

Noted for its gold expertise, Oliver pocketed $5.5 million from the sale of its Segala gold project in Mali in Jan. of 2000. Electing to sit on the cash, the management appointed Patrick Downey as president and CEO late that year. Downey came to the junior from Anglo American‘s (AAUK-Q) Vaal Reefs and Ergo gold mining complexes in South Africa.

Oliver also anticipates changing its name as part of the merger transaction, which is subject to due diligence. The junior intends to seek shareholder approvals at its next annual general meeting, slated for January 31, 2002.