Aur, Louvem seek to minimize dilution building Louvicourt

Partners Aur Resources (TSE) and Societe Miniere Louvem (TSE) expect the capital cost of developing their Louvicourt Twp. massive sulphide deposit east of Val d’Or, Que., to be well over $300 million.

Now a 52% owned subsidiary of Noranda (TSE), Louvem is responsible for 45% of capital costs, while Aur will contribute its 55% share reflecting its interest in the copper-zinc-rich deposit.

Aur’s project management team was on vacation when this article was being prepared. But Lance Tigert, Noranda’s vice-president and treasurer, said the companies are holding daily discussions with bankers in a bid to obtain as much debt financing as possible.

Aur and Louvem expected to be armed soonwith a study by engineering firm Fluor Daniel Wright demonstrating the feasibility of putting a mine into production at the rate of 5,000 tons per day by 1994.

In its 1990 annual report, Aur said equity financing for the project would be inappropriate given the quality of the orebody and the current price of its shares. They were trading recently at $3.60 in a 52-week range of $2.90 and $4.65, while shares of Louvem traded at $3.90 in a range of $3.55 and $6.75. Aur has 43.5 million common shares outstanding and Louvem 18.1 million. At a 3% copper cutoff grade, undiluted preliminary reserves at Louvicourt Twp. stand at 20.9 million tons grading 5.3% copper, 2.3% zinc, 0.96 oz. silver and 0.04 oz. gold per ton. According to Aur, the orebody remains open below a vertical depth of 3,000 ft. where substantial additions to known reserves are possible.

When The Northern Miner spoke to Tigert, work crews were laying the foundations of a hoist and shaft house. They were also planning to start sinking an exploration shaft by late November while estimating what the diameter of a second production shaft should be.

In addition, metallurgical test work designed to establish procedures to maximize metal recoveries and rock mechanical studies to optimize safety and production were continuing.

“We are still aiming for 5,000 tons per day, while using the 3% cutoff option in establishing reserves,” said Tigert. “Everything else kind of flows from there,” he said.

Back in March, Aur Vice-President Howard Stockford said the capital cost of building the mine could be less than $300 million. But Tigert says the underground development should prove to be more expensive than originally predicted by a management team consisting of Tigert and Glen Curtis, vice-president of engineering, on the Noranda side, and Stockford and President James Gill on the Aur side.

Robert Metka, vice-president of engineering and projects at Noranda, was expected to replace Curtis when he retired from the company. Noranda is managing the project on behalf of Louvem which in turn is held 21% by St. Genevieve Resources of Montreal.

Vancouver-based affiliates Teck (TSE) and Cominco (TSE) hold an indirect interest in Louvicourt project via their combined 21.2% interest in Aur. When asked how work at Louvicourt was progressing, Tigert said the two sides have had differences of opinion in the way the feasibility study is being prepared. But he conceded that he is reasonably happy with the way the project is shaping up.