Bidders await Gulf decision on value of Asamera assets

A decision by Gulf Canada Resources (TSE) to put its interest in Asamera Minerals (TSE) on the selling block may spark a bidding war for the Calgary-based company.

A number of mining firms have already expressed interest in the 92%-owned subsidiary of Gulf. Gulf acquired the interest in Asamera Minerals last July when it bought Asamera Inc., principally for its Indonesian oil interests. Toronto-based Northgate Exploration (TSE) and Metall Mining (TSE) for examples, are known to be monitoring the situation.

But the bidding isn’t likely to begin until Gulf places a value on the Asamera Minerals assets which include a 51% interest in the Cannon gold/silver mine in Wenatchee, Wash., and a 100% interest in the Gooseberry mine near Reno, Nev.

Net production to Asamera was 63,151 oz gold and 264,438 oz silver during the first nine months of 1988.

Over the next few weeks, lawyers acting on behalf of Asamera must also decide whether or not Breakwater Resources (TSE) has a right of first refusal on Asamera before any offers are heard.

Based in Vancouver, Breakwater is Asamera’s joint venture partner at the Cannon mine which produced 136,913 oz gold and 184,660 oz silver during 1987. Joint venture holdings also include 4,200 acres surrounding the Cannon mine.

With about 4.5 million tons of proven/probable reserves grading 0.26 oz gold per ton, the partners have enough ore to last for at least five years, according to Asamera President Bill Cooper.

Under a clause in the Cannon joint venture, Breakwater director Peter Brown said he believes his company has a right of first refusal when Gulf names its price. “We are waiting for them to make a decision,” Brown told The Northern Miner.

But Asamera sources say the Breakwater claims depend on how the contract is interpreted.

“If there is an asset sale in an area of mutual interest, the joint venture agreement states that the other party has right of first refusal in any arms length transaction,” said Cooper. “I find it hard to believe that anyone could expand that to include the entire company,” he said.

In addition to the Cannon mine and the Wenatchee acreage, Asamera also has large parcels of land in western Nevada, California and the Northwest Territories.

The Nevada holdings include the Gooseberry mine which produced 2,871 oz gold and 168,577 oz silver during the first nine months of 1988 and the old Ramsey-Comstock mine workings.

Drilling 100 ft below the old Comstock workings has revealed the existence of what appear to be three distinct gold zones, the company said recently.

Gulf’s decision to sell Asamera’s precious metal assets has been interpreted as a strong signal that the Reichmann-controlled company is committing itself to oil and gas.

“Precious metals are not part of their business strategy and even if Asamera was to perform well — earnings and cash flow for the first nine months of 1988 were $5.3(US) million and $13.2 million respectively — it would have no impact on Gulf’s stock,” said Cooper.

After spending $525 million to buy Asamera Inc., Gulf holds approximately 22.9 million common shares of Asamera Minerals. They were trading recently on the Toronto Stock Exchange at $5.13 in a 52-week range of $3.35 and $6.63.

Gulf says it has retained investment banker Shearson Lehman Hutton to handle the sale. “An offer document will be sent to a number of companies and serious ones will be invited to a data room in Calgary,” said Cooper.