Colony Pacific to purchase Westmin Blue Moon interest

The fact that Imperial Metals Corp. was after Westmin Resources’ Blue Moon project has probably been one of Vancouver’s worst kept secrets over the years. But it became very apparent in May, 1986, when Imperial played its hand by acquiring control of Colony Pacific Explorations, Westmin’s joint venture partner in the California property.

Now Colony has agreed to purchase Westmin’s Blue Moon interest for 1.5 million shares plus a 2.75% net profits interest. The latter has spent approximately $2.8 million(US) on the project under a 1984 option agreement; it now holds a 7.25% net profits interest plus a 25% working interest which Westmin can increase to 50% through additional property expenditures. Assuming the deal is consummated, Westmin’s shareholding in Colony will rise to 25.5% and its net profits interest in the property to 10%.

The original option arrangement was an expensive proposition for Westmin, which has been actively pursuing development of its British Silbak and Big Missouri properties in the Stewart area of British Columbia. It’s speculated that Westmin’s commitments to that particular project precluded major expenditures elsewhere including Blue Moon, which has matured to a point where it will require underground exploration and shaft access.

According to Pierre Lebel, who is president of both Imperial and Colony, Imperial’s policy of metals diversification has been in place since the early 1980s. He confirms that Imperial unsuccessfully bid on the Blue Moon once before but kept coming back because it had good minemaking potential.

Reserves are currently stated at 4.1 million tons grading 0.061 oz gold, 2.5 oz silver, 1.2% copper, 0.44% lead and 9.6% zinc. He estimates that about two million tons of this reserve is mineable, noting that a $10-million underground program would be required to better define the mineral reserve.

The program would include a production-sized shaft and require about $3 million in expenditures for underground development and exploration. With equity financing, four million tons of mineable reserves and a 1,500-ton-per-day production rate, he estimates Blue Moon’s present value at $13 million at today’s prices.

Imperial is working towards floating a subsidiary (Anglesey Mining) on the London market to finance work on its Parys Mountain property in Wales, U.K., which is remarkably similar to Blue Moon. Last year, reserves were reported at seven million tons grading 1.75% copper, 2.7% lead, 6.1% zinc, 1.7 oz silver and 0.02 oz gold per ton in three discrete zones. The deposit occurs in an economically depressed region which is close to markets and has extensive infrastructure.