Abacus deals with Teck Cominco

Vancouver — Abacus Mining and Exploration (AME-V) has signed a letter of intent with Teck Cominco (TEK-T) to acquire processing facilities and infrastructure from the past- producing Afton copper mine, 10 km west of Kamloops, B.C.

The deal, which also sees Abacus purchasing Teck Comincos back-in rights on the project area, has the junior issuing 18.5 million shares and paying $10 million over two years. Acquiring Teck Cominco’s back-in right, under which Teck could have bought back as much as a 65% interest, removes a major cloud that has hung over proposed development of Abacus’ Afton projects.

Included in the agreement are the milling and processing facilities, tailings storage areas and other infrastructure used at Teck Cominco’s operation from the late 1970s to the late 1990s. Abacus would also acquire the associated permits.

Additionally, Abacus has received preliminary resource estimates for its Rainbow and DM-Audra zones at Afton. On its Rainbow zone, located about 2 km southeast of DRC Resources’ (DRC-T) Afton pit, outside consultant Gary Giroux calculated an indicated resource of 31.6 million tonnes grading 0.41% copper and 0.1 gram gold per tonne using a 0.25% copper cutoff grade. At the same cutoff grade, a further 1.1 million tonnes of inferred resource averages 0.29% copper and 0.07 gram gold.

On the DM-Audra zone, located about 1 km east of the Afton pit, there is an indicated resource of 16.2 million tonnes grading 0.35% copper and 0.2 gram gold. Inferred resources stand at 9.4 million tonnes at 0.32% copper and 0.15 gram gold, using the same cutoff as Rainbow.

Commenting on the deal with Teck Cominco, Abacus president Doug Fulcher stated “Is Teck onside? I think that this shows that they have a renewed interest. We presented our resource to them and I think we really opened up the mining department’s eyes as to what we were doing. They have obviously looked at our resource and put some credibility into it because they wouldn’t have done a deal and tied up the mill for two years if they didn’t think those grades and the size potential was there. They’ve have certainly put a trust in what we’ve done.”

Reviewing this year’s exploration plans, Fulcher continued, “We’re looking at a minimum of 30,000 metres (of drilling). We want to be at prefeasibility by the end of this year.”

Once the deal has closed, Teck Cominco will become about a 30% shareholder in Abacus, based on the current capital structure of 37.5 million shares outstanding. The company has a $12-million market capitalization at its recent trading level of 33 per share.

Afton-camp neighbour DRC Resources has advanced its main underground decline to 900 metres, more than 70% of its anticipated distance. Ground conditions have been better than expected and development is about one month ahead of schedule and 10% under budget.

In addition to the main decline, a number of cross-cuts will sample the mineralization, providing details on geotechnical and mineralogical aspects required for the development of mining methods and mill design.

The 20,000-metre underground drill program is about one-third complete. Results will be incorporated into the feasibility study to allow resources to be upgraded to reserves.

DRC Resources has budgeted about $18 million for its underground program and feasibility study, and has so far expended about $7 million.

The company’s Afton underground deposit, beneath the old Afton open pit, has a measured and indicated resource of 68.7 million tonnes grading 1.1% copper, 0.85 grams gold, 2.6 grams silver per tonne and 0.12 gram palladium per tonne.

DRC Resources has over $20 million in its treasury. It posts a market capitalization of $79 million based on its 14.4 million shares outstanding and recent $5.50 trading price.