Oliver poised to merge with private company

Vancouver — Oliver Gold (OGO-V) has proposed merging with privately owned Hastings Resource, which holds the rights to the Ona-Puma nickel laterite project, in the northern Brazilian state of Par.

Hastings is led by the former management team of Sutton Resources, which was acquired by Barrick Gold in March 1999.

The proposal calls for Oliver to acquire all the outstanding securities of Hastings. Oliver would consolidate its shares on a 9.3-for-1 basis and issue one new share for each Hastings share. Hastings’ principals would receive 5 million consolidated shares, 90% of which will be held in escrow pending completion of the acquisition Ona-Puma. In return, Hastings must issue between 775,000 and 1 million shares at $1.94 apiece before the merger.

Ona-Puma was worked by Inco (N-T) in the 1970s, and Hastings has a binding letter agreement with the major to acquire a 100% interest in the project. Under this agreement, 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 hold an 18% stake in the merged company.

Ona-Puma comprises 400 sq. km and hosts a near-surface inferred resource of 50 million tonnes grading 2.3% nickel and 0.09% cobalt using a cutoff grade of 1.5% nickel. About a quarter of this resource is inside an indigenous reserve and may not be available for development.

A scoping study suggests the deposit could be exploited using conventional smelting technology. Based on a metallurgical process similar to that used by Inco in Indonesia, throughput of 1.1 million tonnes of laterite per year would yield 23,000 tonnes of nickel matte per year over a mine life of 20 years.

Ona-Puma is 150 km from rail facilities and 100 km from a hydroelectrical source.

Inco’s final agreement with Hastings will include an offtake agreement allowing it to buy and market all the nickel matte produced. The major will also employ its reduction smelting process and provide technical support for exploration and development.

Oliver pocketed $5.5 million from the sale of its Segala gold project in Mali in January 2000.

If shareholders approve the Oliver-Hastings merger, Oliver would undergo an name change, which will be announced.