Corona bids for Asamera’s stake in Cannon mine

Corona reports signing an agreement-in-principle with Asamera whereby the latter would sell all of the shares of its wholly owned U.S. subsidiary Asamera Resources, all of Asamera Minerals’ exploration properties and $2.5 million(US) of working capital.

In return, Asamera would receive 10 million A shares of Corona from treasury (the Corona shares were recently trading on the TSE in the $10 range) and an amount equal to any excess working capital.

In a separate development, Corona reports its wholly owned U.S. subsidiary, Santa Fe Gold, has reached an agreement to purchase, from Echo Bay Mines (TSE), a royalty pertaining to production from the Cannon mine.

The Cannon mine, in production since 1985, turned out 151,634 oz gold and 263,029 oz silver in 1988. Corona, a relatively low-cost gold producer, reports an average cash production cost at the Cannon mine of $210(US) per oz.

Owner of the remaining 49% of the Cannon mine is Breakwater Resources (TSE), in which Corona has a 14% equity interest. Corona says it intends to enter into corporate strategy discussions with Breakwater.

The Asamera-Corona deal is subject to, among other conditions, approval by the respective boards of directors and the proper regulatory authorities.

In addition to Asamera’s interest in the Cannon mine, Corona would acquire the Gooseberry gold-silver mine in Nevada and exploration properties in the U.S. and Canada.

Asamera Minerals is 92% owned by Asamera Inc., a wholly owned subsidiary of Gulf Canada Resources.

Breakwater’s holdings include a variety of property interests. For example, in the Casa Berardi area of Quebec, the company has a 20% interest in the Estrades gold project and may earn another 50% by financing the project to production and making cash payments to juniors Golden Group Explorations and Golden Hope Resources. (Breakwater has small equity interests in both juniors.)

In New Brunswick, Breakwater has agreed to manage the Caribou lead-zinc mine of East West Caribou Mining. The mining project began operations in January of this year but was closed several months later after failing to meet its production target.

A 19.9% interest in Noramco Mining also exposes Breakwater to a number of other mining projects. Noramco’s assets include the closed-down Golden Rose gold mine in northern Ontario, which operated for 13 months in 1987 and 1988 and failed to turn a profit.

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