Mineral exploration companies like to get noticed. But a new venture operating out of Las Vegas and largely controlled by southern Ontario interests has gone one better on the usual junior promotion game.
Vista Continental, which holds a series of placer claims in Peru, took out full-page advertisements in The Wall Street Journal and The Globe and Mail touting its project as “a commanding portion of the world supply of rare earths, zirconium and zirconium oxides.”
The heady pronouncement is based on very limited sampling and liberal volume estimates made on gravel flood plains and terraces.
The company timed its ads to coincide with its announcement that it is obtaining U.S. over-the-counter trading status through a reverse-takeover of a Delaware-based corporate shell,
A version of a report by Colorado-based consulting geologist David Heyl, available on Vista Continental’s web site, identifies the area only as being in the region of a fictional “Central City, South America.” It is censored to disguise the location and some of the specifics of the study.
Filing documents reveal that the property Heyl examined is a 50-sq.-km block of leases or concessions in the upper Ucayali valley, which lies on the eastern flank of the Andes in La Convencion province in central Peru. The properties possibly sit along the Urubamba River and its tributary the Vilcanota.
Heyl’s report covers two of Vista Continental’s nine claims in the area. The study is mainly a review of previous work; Heyl was not commissioned to do a resource calculation or any sampling work on the property.
The properties were vended into Vista by sometime southern Ontario real estate developer Alberto DoCouto, who will own about 75% of the company after the reverse-takeover. Do Couto’s Peruvian-domiciled company, Quillabamba Mining, controlled seven mining leases in the area, and in a deal in October 2000, DoCouto sold Quillabamba to Vista Continental in exchange for 23.5 million shares in the then-private company. A DoCouto company will also retain a 10% net revenue interest in production from the properties.
Nine blocks
DoCouto also controls a further 27 properties in the area, which Vista Continental is planning to acquire. All together, Vista Continental’s nine blocks and DoCouto’s other properties cover about a 225-km stretch of river.
Disclosure documents filed with the U.S. Securities and Exchange Commission identify the remaining investors in Vista Continental as the shareholders of a California-based business trust. Two shareholders — Steven Hegedus, a dentist from Welland, Ont., and Ashak Rustom, a Toronto-based financial professional who is an officer of several companies associated with DoCouto — will be among the new company’s directors.
Another Niagara-area dentist, Lawrence Nash, will be president. He was formerly chief executive officer of West Nevada Precious Metals, a company “engaged in precious metals testing,” currently headed by DoCouto.
While Vista Continental’s release quotes geologist Heyl as comparing the heavy mineral deposits to “the Motherlode belt of California and the Eastern Australia gold belt,” the available version of Heyl’s geological report only makes the comparison in the context of the mechanism by which the placer deposits were emplaced.
The river deposits, according to Heyl’s report, are derived from erosion of hard-rock precious-metal deposits and of resistant minerals from upper Paleozoic and Mesozoic granodiorites in the eastern Cordillera.
Heyl’s report mentions grades of ranging from 0.02 to 7 grams per cubic metre of gravel in the unconsolidated material (placer grades are notoriously erratic).
Unpublished resource
An unpublished and unreferenced resource estimate in Heyl’s report, said to be from 1990, puts the indicated resource at 115 million cubic metres, and the “geologic resource” — presumably meaning inferred — at 472 million cubic metres. The indicated resource grades 0.25 gram per cubic metre in flood plain sediments; the geologic resource grades the same 0.25 gram in the flood plain and 0.1 gram per cubic metre in gravel terraces. Although Heyl describes a sampling routine at the property, and visited it frequently from 1987 onward, the report itself is not based on resource sampling.
Heyl’s report also says previous evaluations of the gravels show they contain about 3% heavy minerals, including zircon, ilmenite and monazite. He estimated grades of 21.2 kg ilmenite, 14.9 kg zircon, and 11.3 kg monazite in the flood-plain gravels that make up the indicated resource, and higher grades in part of the geologic resource.
Heyl’s report is also the source of Vista Continental’s gross value figures. The company quoted a “total potential value” of US$4.86 billion in rare earths (the monazite concentrate), US$3.5 billion in zircon, US$1.25 billion in ilmenite, and US$1.12 billion in gold, for a total of US$10.73 billion.
Nash, the company’s president, pointed out in the press release that the gross values were “based only on the results of assays on two of these claims to depths of 10 metres when some deposits are believed to run as deep as 200 metres.”
Acres International, the large, Niagara Falls-based civil-engineering consulting firm, provided Vista Continental with a scoping study in February. (Dennis Hare, a retired vice-president at Acres, is also on the board of Vista Continental.) The company has not released any figures on the capital or operating costs of the project.
The company also said it had plans to begin operating a refinery, presumably for the rare-earth metals, on Santa Maria Island in the Portuguese Azores.
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