Gulf puts Asamera back on the auction block

Even though the company was formally taken off the auction block in May of last year, Asamera Minerals (TSE) is once again being offered for sale by a unit of its parent company, Gulf Canada Resources. This time round, Asamera could attract additional interest because of a successful exploration program last summer at its 50% owned Meliadine River gold discovery near Rankin Inlet, N.W.T.

Last year, Asamera completed a 14-hole drill program on the discovery where high gold values were encountered associated with altered iron formation.

The drilling was done to follow-up high-grade values from grab samples collected intermittently over a strike length of seven miles. Last year’s drilling was focused on a mineralized area that was traced for 750 ft., and 11 of the 14 holes encountered mineralization (T.N.M., Nov. 5/90).

Along with its partner, Comaplex Minerals, Asamera is planning an expanded 1991 program for the project which is now considered one of its key exploration assets.

Acquired for the most part by staking, the partners now control over 700,000 acres of prospective greenstone belt with strong linear airborne magnetic features.

Asamera is best known, however, for its 51% interest in the Cannon gold mine at Wenatchee, Wash. The underground mine is a significant contributor to the company’s revenue which totalled US$37.5 million in 1990, down slightly from US$36.9 million in 1989.

Although a small amount of production comes from Asamera’s Gooseberry mine and associated tailings project in Nevada, the bulk of production is from the Cannon mine. In 1990, the company’s total net production was 85,307 oz. gold and 445,687 oz. silver, an increase of 2% and a decrease of 3% respectively, compared with 1989.

But because of a policy change in method of accounting for exploration expenditures, Asamera Minerals wrote off US$6.9 million of prior years’ deferred expenditures. In addition, the company spent US$3.1 million of exploration costs incurred in 1990.

So while income before the change in accounting policy and income taxes was US$1.7 million, the net loss for the year was US$5.2 million, or US21 cents per share. This compares with earnings of US$2 million in 1989.

Up until May, 1990, Gulf Canada Resources actively sought to dispose of its 92% interest in Asamera Minerals. Corona (TSE) and Audrey Resources (TSE) were potential suitors, but both companies eventually backed away from their initial offers.

It has been reported that potential buyers were not prepared to take on potential environmental liabilities associated with the former activities of Asamera Oil, a wholly owned subsidiary of Asamera Minerals.