Crew plans merger with Mindex, Botswana

Three companies — Crew Development (CRU-T), Botswana Diamondfields (BWD-V) and Norwegian-based Mindex — plan to establish an internationally listed, multi-commodity mining group.

The merged entity would have operations in South Africa, Zambia, Ghana, the Philippines, Greenland and Norway.

Crew intends to make a voluntary offer of not less than 90% of the shares of Mindex. The transaction calls for a 1-to-1 offering of Mindex shares for a new company called Mindex Invest ASA. Mindex shareholders will retain existing net smelter royalty rights through this new company. The net smelter royalties include 2.5% from the Mindoro Nickel project, 2% from the Roros Zinc project, 1% from the Nalunaq gold project and 1% from the Hwini-Butre project.

In addition to the shares of Mindex Invest, Mindex shareholders will receive 0.5714 share of Crew Development for each Mindex share. If successful, Crew would issue 26.4 million shares.

In a separate agreement, Crew and Botswana Diamondfields have agreed to an arrangement whereby shareholders of Botswana will exchange their shares for Crew shares according to a ratio of two Crew units for three Botswana units. The agreement will result in Botswana becoming a wholly owned subsidiary of Crew in return for 11.2 million shares of Crew.

Each agreement is independent of, and not conditional on, the completion of the other. Crew will make formal merger offers once satisfactory due diligence has been completed.

Crew is a profitable international company with revenues from seven operations that produce copper, zinc, gold, antimony, fluorspar, manganese and coal. Over the past two years, the company has tripled its annual sales to $145 million.

Currently, Crew has 32.6 million shares outstanding; if both transactions are completed, this would increase to 70 million. The market capitalization of the new company is pegged at $100 million.

The new group will continue under the name Crew Development and have its headquarters in Vancouver. Crew says it will seek a listing on the Oslo Stock Exchange and intends to maintain an office in Oslo to direct its Norwegian exploration efforts, as well as meet the needs of its new shareholders.

Mindex, which is based in Oslo and listed on the Oslo exchange, has an exploration portfolio of base metal and gold projects in Norway and Ghana, West Africa.

Mindex’s major asset is its wholly owned Mindoro nickel laterite deposit in the Philippines. In August 1998, Kvaerner Metals completed a positive prefeasibility study that indicated nickel could be produced at US$1.06 per lb., or US30 cents per lb. net of cobalt credits.

Measured and indicated resources are pegged at 70 million tonnes of laterite ore grading 1% nickel and 0.01% cobalt — sufficient for a 20-year mine life. The project is expected to produce 126,000 tonnes of ammonium sulphate per year, as a byproduct of the mining process. The Philippines imports about 400,000 tonnes of ammonium sulphate per year, which is used for rice and sugar cane production.

The project has deep water access, and a gas pipeline is being constructed close to the planned location of the processing plant. A full feasibility study will attempt to determine the viability of a 40,000-tonne-per-year nickel operation. The project is also expected to produce 3,000 tonnes of cobalt and 216,000 tonnes of ammonium sulphate per year.

Mindex also holds a half-interest in the high-grade Nalunaq gold project in Greenland, with the remainder held by the country’s government. In March, H.A. Simons completed a positive prefeasibility study that suggested a 500-tonne-per-day operation could produce gold at a cash cost of US$160 per oz. The Nalunaq deposit has an indicated and inferred resource of 413,000 tonnes grading 32 grams gold per tonne, or 425,000 contained ounces gold. Mindex says there is excellent potential for increasing the size of the deposit through further drilling.

In Ghana, Mindex holds a 51% interest in the Hwini-Butre gold project, with the remainder held by the operator, Vancouver-based St. Jude Resources (sjd-v). The concession consists of three primary gold shear-zone targets: the Adoikrom, Dabokrom and Father Brown zones. Drilling to date has outlined some narrow high-grade gold zones.

In Norway, Mindex has made an agreement with Noranda (nor-t) on its Roros zinc project. Noranda stands to earn a 70% interest in the property by conducting exploration and bringing the project to the final feasibility stage. The project area includes 24 small, formerly producing copper mines and 60 prospects with stratiform zinc-copper mineralization, all of which are within an area of 3,000 sq. km.

Botswana Diamondfields is a junior diamond exploration company and, over the past five years, has focused its activities in Southern Africa. None of the company’s projects is under development.