Ansil works out $4-million deal with Minnova

An agreement worked out between Minnova (TSE) and Ansil Resources (CDN) will see Ansil receive $4 million in cash from Minnova.

The sum represents the purchase of all of Ansil’s past and future royalty rights with respect to the Ansil copper property near Rouyn-Noranda, Que. The agreement resolves Ansil’s dispute with Minnova, but it still leaves the producer facing lawsuits from Opawica Explorations (TSE) and Zenmac Zinc (ASE) over other mining projects.

All three junior companies dealt their mining properties to Minnova for development, all three properties turned out to be producing mines, and all three companies seem to have the same disagreement with Minnova: when do the royalties specified in the option agreements kick in?

In Ansil’s case, 20% of the first $2 million of “net proceeds” was to be paid as royalty. After the first $2 million, it would be 7.5%. “Net proceeds” were defined as the excess of income after expenses.

Failing a precise definition of expenses, operators such as Minnova assume they borrow 100% of their needs to cover capital and exploration costs. They then charge the principle at prime rate plus 1%.

Along with other interpretations of their respective agreements with Minnova, Opawica and Zenmac dispute the manner in which interest is charged. Ansil did not sue but discussions were ongoing for a year before settlement was reached.

Asked what Ansil would do with the money, President Todson Becker said: “Back into mining of course. Mining and exploration are our business. We have a number of active companies but we certainly won’t be spending anything in Ontario, not until we see a change in government policy — or a change in government.”

Though just about exhausted, the Ansil orebody is typical of the several rich but relatively small copper deposits lying to the north of Rouyn-Noranda. They are also deep with little, if any, surface expression. Exploration means high-powered theorizing and sufficient patience and capital to test for tonnage and grade.

Ansil was discovered by a straddle of 12 holes drilled in 1981 to depths of 1,200-1,500 metres. Full production started in 1989. Closure is scheduled for February, 1993, and it is estimated 1.6 million tonnes will have been mined grading 7.1% copper, 1.0 % zinc, 24 grams silver and 1.7 grams gold per tonne.