Aur to buy Granges properties

A deal covering 39 base metal properties has been struck between Aur Resources (TSE) and Granges (TSE). Many of the properties have already been subjected to reserve estimates, while others are known for their significant copper-zinc-gold intersections.

Aur agreed to issue 1.25 million of its common shares to Granges, along with a 2% net smelter return royalty interest, in exchange for the 425,000-acre land package in northern Manitoba and Saskatchewan. As well, Aur can repurchase half the royalty interest for $1 million.

Most of the properties are in the prolific mining camps of Flin Flon, Snow Lake and Lynn Lake in Manitoba. Twenty-two are in the Flin Flon-Snow Lake area; six others are in the Lynn Lake camp; while those remaining are scattered throughout northern Saskatchewan and Manitoba.

In addition to the properties, the deal includes a regional technical database and some equipment.

The three mining camps have produced copper-zinc-gold ore from 22 mines. As well as having potential for new discoveries, the camps feature a source of skilled manpower, several concentrators, a copper smelter and a zinc refinery.

Aur President James Gill says his company “liked the fact that most of the ground is in known base metal camps with many past and present producing mines.” In addition, he thinks Aur’s past experience in the Val d’Or region of Quebec will help guide exploration efforts in Manitoba and Saskatchewan.

“Exploring large land positions for volcanogenic massive sulphides is something we have a lot of expertise in,” he says. “We did it in Val d’Or, and found deposits including Louvicourt.”

Aur is optimistic about its chances for similar success in Manitoba and Saskatchewan.

Negotiations for property in these regions began earlier this year when Aur approached Granges with the intent of optioning some of its base metal prospects. “We had looked at the area before and liked what we saw.” Gill adds.

Granges had just completed re-assessing its corporate objectives and decided to get out of the base metal exploration business and focus on producing precious metals.

When approached by Aur, Granges put together a larger group of properties and the deal was agreed upon. Granges is currently exploring for gold in the western U.S. and Mexico.

With the deal struck, Aur approved an exploration budget of $1 million to carry out drilling of copper-zinc targets and compile technical data in preparation for a long-term program. Aur expects to be working in these areas for at least 10 years.

To help finance the acquisition and the subsequent exploration program, Aur granted Thunderwood Resources (TSE) and Consolidated Abitibi Resources (ME) each the right to earn a 30% interest in the properties.

Each company must provide Aur with $5 million on or before Dec. 31, 1998, and a minimum of $500,000 must be spent by each of the two companies in 1995.

Both companies are expected to issue shares in order to fund their respective commitments. Aur has been granted a first right of refusal to purchase up to 50% of any flow-through shares issued by the two companies to raise exploration funds.

Aur has also issued a normal course issuer bid to repurchase up to 1.25 million of its common shares, representing 2.2% of the company’s currently issued and outstanding common shares. Shares will be purchased over the next 12 months on both the Toronto Stock Exchange and the Montreal Exchange.

The closing of the Aur-Granges transaction is subject to Granges obtaining waivers of rights of refusal from existing joint-venture partners on certain properties, due diligence and regulatory approvals. All other agreements are also subject to regulatory approval.