Camreco acquires Goldlund and plans drilling program – ld

With plans of a drilling program this year Camreco Inc. is going “to try to make something out of” the Goldlund Mines’ mining and milling operation on 83 contiguous claims near Sioux Lookout in northwestern Ontario.

Camreco President Matthew Gaasenbeek says a review of all geological data is already under way on the Goldlund property as well as Camreco’s adjacent 19-claim Echo Twp. property.

These plans follow the wind-up of several months’ negotiations which sees Toronto-listed Camreco complete a plan of arrangement with Goldlund. Under the terms of the arrangement, all of the outstanding common shares of Goldlund, which number 15.6 million, are to be exchanged for common shares of Camreco on the basis of one share of Camreco for every 10 shares of Goldlund. At presstime, Camreco shares were trading at about the 55 cents level.

This arrangement received the approval of the Supreme Court of Ontario on Dec 22.

Prior to the completion of the plan of arrangement, Goldlund completed a proposal under the Bankruptcy Act (Canada) with its unsecured creditors which will settle the claims of all such creditors in return for a 5% 10-year interest in the net profit of Goldlund.

The proposal was approved by the Supreme Court of Ontario in Bankruptcy on Nov 17.

In addition, Camreco has purchased the claims of the major secured creditor of Goldlund, having an estimated value of $8.4 million, for $150,000 cash, 320,000 common shares of Camreco and 200,000 convertible preference shares of Camreco, having a stated value of $4 million.

The convertible preference shares of Camreco carry dividends related to the price of gold and are convertible into Camreco common shares at a rate of $1.90 per common share.

The major secured creditors of Goldlund are Campbell Resources and Camchib Mines a wholly-owned subsidiary of Campbell Resources.

This acquisition of Goldlund by Camreco gives the latter a total of 102 claims in the Kenora mining district. And it might also give Goldlund another chance at production.

Few would argue that Goldlund has had a difficult past. Discovered in 1941, the gold property was partially developed and explored by numerous partners until 1982 when Goldlund built a 200-ton- per-day mill and began operating. The company suffered a loss of $3 million in its first year of operations. On the heels of an announced increase in production to 350 tons per day, Campbell Resources entered the picture and became a 32% equity shareholder.

But in February, 1985, the operation was shut down due to a combination of low gold prices, ore grade problems and under-capitalization. In November of that year, Peat Marwick was appointed receiver of Goldlund by Campbell and Camchib.

Camreco’s plans for this year include a drill program on the property to outline additional reserves. Total proven and probable reserves on the property stand at 200,000 tons of 0.180 oz gold per ton between the 200-ft to 500-ft levels in the number one zone. The number two and number three zones, though explored extensively by trenching and shallow diamond drilling, have not been investigated underground.

Though it is too early to speculate on a production decision, “we are going to try to make something out of it,” says Mr Gaasanbeek. The reserves on Camreco’s adjacent property stand at 300,000 tons with an average uncut grade of 0.28 oz.