Minco gains stake in Chinese property

An agreement with Pacific Canada Resources (PCR), a private, arm’s-length company, gives Minco Mining & Metals (VSE) the right to acquire an interest in a portfolio of Chinese base and precious metal property agreements and acquisition rights.

In return, PCR will receive 7.3 million shares of Minco, 4.9 million of which will be subject to an escrow agreement and released according to a formula.

PCR already has signed agreements with Teck (TSE) and Cominco (TSE), and the Minco deal gives the majors earn-in rights on any two properties, upon which Teck and Cominco will also have preferential rights of purchase on all the company’s other properties for a 3-year period.

The majors’ participation includes the right to acquire a 70% interest in the non-Chinese interest in a development property, and a 51% interest in the non-Chinese interest in an exploration property.

Teck and Cominco are each investing $500,000 in a private placement of Minco units at 80 CENTS each. Proceeds from the placement will be used to fund exploration work on the Chinese properties.

PCR and Teck are negotiating with the Chinese to form a joint venture on the Changba and Lijiagou zinc-lead deposits.

The Chinese are mining the Changba by open-pit methods at a rate of 1,500 tonnes per day and are expanding daily production to 3,500 tonnes.

The Changba deposit has reserves, minable by open-pit methods, of 23 million tonnes grading 20% combined zinc-lead, plus a resource of 15 million tonnes grading 15% zinc-lead.

The Lijiagou represents the faulted extension of the Changba and contains an estimated 34.5 million tonnes grading 13.5% combined zinc-lead, including an underground minable reserve of 24 million tonnes grading 12.5% combined zinc-lead.

In addition to the zinc-lead project, Minco, through PCR, can acquire an interest in three gold and polymetallic properties in Hebei province.