Imperial Metals an enigma

Companies (like people) are often misunderstood, which is why Imperial Metals describes itself as “somewhat of an enigma” in the junior resource sector. But addressing the annual meeting, President Pierre B. Lebel maintained that the company was not all that difficult to understand on a “sector-by-sector” basis.

In the past three years, Imperial has invested an average of $500,000 per year in resource exploration out of a total group budget exceeding $2 million each year. The company manages the exploration and investment activities of 14 West German limited partnerships and also Colony Pacific Explorations.

Pointing out that total assets under its administration exceed $100 million, Mr Lebel said net management revenues have increased steadily in the past four years to the present $900,000 per year after deducting all related expenses.

He said an internal evaluation has established a present worth for the company’s assets of $34.8 million or $2.22 per share fully diluted at 16.5 milllion shares. He also noted that Imperial has kept $17 million from group property sales which totalled $42 million in the past five years. And he adds the prospects for future gains from property sales have been heavily discounted by the market.

Company activities are being supported by revenues from oil and gas production, management fees, mineral royalties and investment revenues, he said. Even at present oil and gas prices, Imperial predicts its net cash flow will continue to average $400,000 per year.

He said the company has no immediate plans for a public financing but added that a systematic campaign is under way to make Imperial better known in the investment community — something that could lead to an improved share price.

Hugh C. Morris, chairman and chief executive officer, said the Sterling mine in Nevada was producing about 12,000 oz gold per year and a new operating plan will see the development of another open pit. This is expected to improve mining recoveries and production costs, he said.

The Hog ranch project should be producing later this year at a rate of 2,400 tons per day. The joint venture is led by Western Goldfields and reserves there are 4.9 million tons grading 0.074 oz gold. Imperial has a 1.5% beneficial interest in the project but the Imperial Metals group has 30%. In response to a shareholder’s question, Mr Morris conceded that Imperial would like to increase its interest in the project but “other owners probably have similar ideas.”

The company has applied for a mining permit for its Paredones gold project in Mexico which should be received by year-end, he said. The gold heap leach project would only take a short time to bring into production once the go- ahead is given.

A mining application has also been submitted for the Parys Mountain project in North Wales in the United Kingdom. He predicted it would be in production in the next three years but noted permitting will take time because few such applications have been submitted in recent years.

Drilling has confirmed three million tons grading 8.55% zinc, 1.4% copper, 0.6% lead, 2.3 oz silver and 0.043 oz gold at the Blue Moon project in California. Westmin Resources, the operator, has demonstrated that the area of ore grade mineralization extends far beyond the originally-defined lens. Imperial controls Colony Pacific which optioned the property to Westmin.