First Exploration Fund goes public under new name

The 2,534 investors who bought units of First Exploration Fund last year are now the proud shareholders of Equity Preservation Corp.

Trading publicly for the first time this week on the Montreal, Toronto and Vancouver stock exchanges, Equity shares traded at about $6. Not bad for a stock portfolio made up exclusively of junior mine exploration companies without a single producing mine.

But these companies, 37 in all, are working in virtually every exploration camp in the country — 80% of them in gold. Equity’s holding in these companies is estimated to be worth $40 million.

“The flow-through shares we bought at an average price of $1 in 1986 and are now worth an average of $1.70,” Peter L. Bradshaw, president and ceo of Equity told The Northern Miner in an interview this week.

Going public is the third, or maturing stage of development of Equity, Mr Bradshaw says. The first stage, a national public offering last year, which raised $35.8 million exclusively for junior mine exploration, was the initial investment phase. It was followed by the dormant stage early this year when intitial exploration work was completed on properties totalling 75,000 claims and shares in the juniors were issued to Equity.

But it does’nt end here. First Exploration Fund 1987, a $60-million fund which has just been completed and First Exploration Fund 1988, scheduled to close this fall will also go public eventually. Under existing flow-through tax laws, introduced last spring, these will likely be the last great, national flow-through fundings. After that, Equity plans another smalle r flow- through fund in 1989 but will probably raise funds through underwritings in the company itself as well.

The majority of the junior companies already funded by Equity are looking for either pure gold or gold and silver mines. The rest are active in base metals, polymetallic deposits and platinum group metals, according to Dr. Gerry G. Carlson, director of investor relations and member of Equity’s exploration review board.

Two gold projects funded by Equity — Tundra Gold Mines’ underground exploration work at the Lamaque mine (see seperate front- page story) and the Northfield Minerals and Northern Ranger’s Cheminis joint venture project with Kerr Addison Mines and Eldorado Nuclear near Larder Lake, Ont. are both close to a production decision.

A third, Gordex Minerals’ Cape Spencer project near Saint John, N.B. went into commercial production this week (see seperate story).

In base metals, Equity is the largest investor in the Rouyn-Noranda camp through Seadrift International Exploration, which recently hit a big 35-ft intersection of copper and zinc at a depth of about 1,000 ft (see seperate story).

Other base metals projects funded by First Exploration include Normine Resources’ project in the Sullivan camp near Kimberly, B.C. and an polymetallic project near the Windy Craggy project in B.C. managed by Stryker Resources of Vancouver.

Platinum projects include Marker Resources joint venture with BP Selco in the Bird River Sill area of Manitoba and Nexus Resource Corp’s joint venture with St Joe Gold Corp in the Birch Lake are of Ontario.

As these projects get closer to a production decision, major capital expenditures will be necessary. This is where Mr Bradshaw says the real benefits of Equity adding international stature to what he likes to call “our juniors.” If European investors, for example are not familiar with Canadian juniors, they can turn with confidence to Equity which puts each junior through an extensive screening process before it agrees to finance the company. About 250 companies made submissions to First Exploration last year.

Equity has also attracted some rather sophisticated investors to its board of directors. So far Karl E. Elders, a director of Battle Mountain Gold of Houston, Texas, Stephen R. Sharpe, chairman of Parmount Funding Corp of Toronto and Robert R. McEwen, president of csa Management of Toronto have all joined Equity’s Board of Directors.

As juniors bring mines into production Equity will likely sell its shares in the company. “Our concept is to stay in exploration,” Bradshaw says. “We are going to be a proxy for junior exploration.”

In the future, Equity may have to decide whether to become an operating company or not. Already, the company is moving into the area of in-house gold market forcasting like many major mining companies do.