Audrey planning an offer for Asamera Min. assets

Polymetallic miner Audrey Resources (TSE), based in Rouyn- Noranda, Que., is hoping to pick up where Corona left off by making a takeover offer for the Canadian and U.S. mineral assets of Asamera Minerals (TSE). Guy Hebert, president of Audrey, says he has retained Richardson Greenshields of Canada to act as financial adviser and to help raise the approximately $100 million needed to make a competitive offer. Asamera Minerals — a 92% owned subsidiary of Calgary-based Asamera Inc., which in turn is owned by Gulf Canada Resources — has proved too expensive for the companies that have looked at it so far.

Its main asset is a 51% stake in the 160,000-oz.-per-year Cannon gold mine in Wenatchee, Wash., which Corona tentatively agreed to buy along with Asamera’s other mineral assets in November. Breakwater Resources (TSE) holds the remaining 49% stake in Cannon.

Corona withdrew its offer in January after discovering Asamera’s exposure to potential tax liabilities stemming from certain environmental liabilities attached to landfill site owned by Asamera Oil.

Primarily a share swap proposal, the Corona offer was valued at about $115 million, according to a Gulf spokesman who said Audrey is not the only company currently showing an interest in Asamera.

Because Audrey’s bid will exclude Asamera’s oil assets, problems posed by the landfill site are not a concern. Hebert said he is attracted by the cash flow generated by Asamera’s Cannon mine and the exploration potential of a 165-square-mile property around the Gooseberry gold-silver mine in Nevada.

Ranking as one of North America’s lowest-cost gold producers, Cannon would push Audrey’s gold output past the 100,000-oz. threshold. Average cash production costs in 1988 were US$210 per oz.

While he declined to say what the offer might consist of or when it might be tabled, Hebert plans to use the US$17 million in Asamera’s treasury to help finance the acquisition.

In addition to $8 million in cash and short-term deposits, Audrey’s chief asset is the 1,100-tons-per-day Mobrun polymetallic mine near Rouyn-Noranda, which is being developed into a much larger operation under a joint venture with Minnova (TSE). After production resumed in September, the mine turned out 1.9 millon lb. copper, 3.7 million lb. zinc, 4,274 oz. gold and 17,648 oz. silver in the last three months of 1989.

Future growth is predicated on the 10-million-ton 1100 lens, which is the largest of five massive sulphide lenses discovered on the Mobrun property so far. Definition drilling on the 1100 recently yielded a 161-ft. intersection averaging 0.89% copper, 9.37% zinc, 1.46 oz. silver and 0.030 oz. gold. The intersection included a 50-ft. section with an average grade of 2.26% zinc.

Audrey has already discovered five massive sulphide lenses, four of which are being mined. It is conducting a 10,000-ft. surface drilling program to look for yet another lens. The program is targeting a geophysical anomaly 2,400 ft. below surface that was picked up in deep holes east of 1100.

Although Mobrun throughput may double when the 1100 comes on stream in 1992, Hebert has been looking for possible acquisitions to boost his company’s cash flow.

He says a successful bid for Asamera would triple his company’s market capitalization from $40 million to around $150 million and attract the interest of institutional investors. Aur has 15 million shares issued and outstanding, rising to 19 million fully diluted. The shares were trading recently at $3 on The Toronto Stock Exchange.

Asamera has about 25 million shares outstanding and they traded recently at $2.20 on the Toronto exchange. “This is a big move for us but it could be well worth it,” Hebert told The Northern Miner.