Arimetco, Breakwater join with NovaGold in copper venture

A joint venture has been formed by Arimetco International (TSE) and Breakwater Resources (TSE) with NovaGold Resources (TSE) to process copper ore from Nova- Gold’s Murray Brook property in northern New Brunswick.

NovaGold will have a 50% interest in the venture and Arimetco-Breakwater the other 50%.

Mining of known open-pit reserves at Murray Brook of about 500,000 tons grading 2.5% copper will commence as soon as permitting allows, the companies say.

Murray Brook is a former gold producer; the gold reserves there were mined out by NovaGold between September, 1989, and this past summer. The East West Caribou mill five miles east of Murray Brook will be used to process the copper ore at a minimum rate of 2,000 tons per day. The Murray Brook copper ore will allow a restart of the Caribou mill while Arimetco-Breakwater continues testing of ammonical leaching, solvent extraction and electrowinning of zinc from Caribou’s “bulk” zinc concentrates. The first phase of this program was successfully concluded after a 90-day pilot plant run, Arimetco says.

Consistent recovery of plus-80% zinc contained in run-of-mine ore was achieved through the mill and leach circuit, the company says, at an initial projected operating cost of US49 cents per lb. zinc (including all mine, mill and support costs; these costs do not include lead credit, precious metals credit, ammonium sulphate credit or any credit for special high grade zinc). Western States Engineering of Tucson will continue the testing program under contract.

In addition, Arimetco-Breakwater plan to reprocess 250,000 tons of Anaconda copper tailings grading 1.5% copper at Caribou as well as a high-grade copper lens in the Caribou mine.

As a part of the formation of the joint venture, Arimetco-Breakwater subscribed to $500,000 worth of NovaGold common shares and an equivalent number of warrants to purchase common shares exercisable for a 2-year period at 10 cents above the subscription price.

Under the agreement, which is subject to regulatory and board of director approval, Arimetco-Breakwater will fund and manage a $500,000 drilling program at Murray Brook to expand copper reserves as well as define other mineralization.

On completion of the definition and enhancement drilling program, Arimetco-Breakwater have an option to earn a 50% interest in the additional reserves by paying NovaGold $2 million by June 30, 1993, and by purchasing a further $2 million of NovaGold stock at 50 cents per share on or before Oct. 31, 1993.