Vancouver — By mid-June,
The Vancouver-based company plans to make a takeover bid for
Asarco, a wholly owned unit of
Minto’s board also endorsed the offer, which follows a 9-month sale process overseen by an independent committee. The company had hoped to sell the project for about $20 million, well above the estimated $8-million deal that was finally accepted.
Sherwood President Bruce McLeod says the price does not reflect the quality of the project, which he describes as “robust,” but rather its fragmented ownership, and even its size relative to the mega-projects being pursued and financed in the present bull market.
“From our point of view, if it was big enough for Asarco, it’s big enough for Sherwood,” he adds. “It’s a good asset with lots of exploration potential.”
Asarco’s original feasibility study was based on a resource of 9.7 million tons grading 1.73% copper plus 0.014 oz. gold and 0.22 oz. silver per ton. The company initially focused on open-pit mining of 6.5 million tons grading 2.13% copper, 0.018 oz. gold and 0.27 oz. silver. A portion of this, about 191,000 tons, was mined from underground.
The 1995 feasibility study assumed a waste-to-ore stripping ratio of 4.9-to-1 and a daily milling rate of 1,500 tons to produce 254 million lbs. copper over a lifespan of 12 years. Capital costs were then estimated at $26.6 million. A subsequent independent review in 2000 proposed boosting the daily throughput to 1,723 tons and reducing the mine life to 11 years.
Sherwood plans to update the study to take into account changes in metal prices, exchange ratios, and the cost of consumables and labour. The company also plans to upgrade the historic resource to meet National Instrument 43-101 reporting standards.
Sherwood is 38%-owned by
If the deal closes as planned, Sherwood would be required to repay $680,000 of debt owed to Asarco by Minto. Asarco would then transfer its rights to earn a 70% interest in the project. Sherwood can also buy Asarco’s 0.375% royalty for $350,000.
“Our goal is to consolidate ownership under one roof,” McLeod says.
On closing, Sherwood will amend existing permits, including a previously granted water licence (if necessary). Minto has already negotiated a benefit agreement with local First Nations.
If the feasibility update and related work prove successful, the company will build a low-cost, copper-gold mine employing open-pit mining and conventional milling techniques.
Exploration to expand known resources and test early-stage targets is also planned. Previous drilling for extensions of the main deposit returned encouraging results, namely 73 ft. grading 3.05% copper. Drilling of exploration targets near the deposit also proved satisfactory, highlights being 53 ft. grading 3.2% copper and 25 ft. grading 5.3% copper.
In order to focus on the Minto project, Sherwood has dropped its option to earn an interest in the Chicago claims on the Hope Bay belt in Nunavut, from Miramar Mining.
Sherwood intends to propose a share consolidation of up to four shares for each new share, as well as a name change, at its annual meeting of shareholders in mid-April.
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