Giant Yellowknife faces sale to Frame Mining

Parent company Giant Resources of Australia has entered into a letter of intent for the purchase of its Canadian assets by Frame Mining, a private Toronto company, or its nominee.

The letter of intent provided for the purchaser’s due diligence to be completed by Nov 26 (Sydney time) and for entering into formal documentation by that time. Closing is expected by year-end. The sale will be subject to regulatory approval in Canada and Australia, and to the approval of shareholders of Giant Resources and its Australian subsidiary Jimberlana Minerals.

Owner of Frame Mining is Clifford Frame, a former president of the Pamour group. Frame is currently chairman of Curragh Resources, a private company in which Giant Resources of Australia has a 43.7% interest. (Frame is a major shareholder in the remaining Curragh interest.)

The Canadian assets to be sold by Giant Resources include its interest in Curragh, which operates the lead-zinc-silver Faro mine in the Yukon. While Frame wants to purchase Giant’s Curragh interest, it is not clear whether he intends to keep the Giant Yellowknife properties or sell them to another party.

It was reported (N.M., Oct 9/89) the parent Australian companies of the Pamour group are experiencing debt problems, and sale of the Canadian mining assets were being considered.

The Pamour group includes Pamour Inc. (TSE), a holding company; Giant Yellowknife, with producing properties in Timmins and the Northwest Territories; ERG Resources (TSE), owner of a large tailings treatment project at Timmins; exploration arm Pamorex Minerals (TSE); Akaitcho Yellowknife Gold Mines (TSE); and Mate Yellowknife Gold Mines (COATS). The Canadian assets to be sold also include certain debts owed by Pamour and ERG to Giant Resources.

The president of Pamour and the other five companies listed above, Adrian Fleming, said the purchase price for the shares of the Pamour group will not exceed current market values and the purchaser does not propose to make an offer to acquire additional shares at this time. (None of the companies is 100% owned.)

Giant Yellowknife, which produced 187,354 oz gold in 1988, has been struggling to control its operating costs. The company recently reported successfully reducing minesite costs during the third quarter of 1989 at its conventional mining operations at Timmins and Yellowknife to $378(C) per oz and $363, respectively. In 1988, the same costs averaged $600 and $549, respectively.

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