MINING MARKETS & INVESTMENT NEWS — QUERY — El-Bonanza back in the saddle again

A friend of mine bought shares in El-Bonanza Mining back in 1978. He recently came across the long-forgotten share certificate, and as he was not really into the stock market, but knew that I own and follow mining stocks, he asked me to dig up as much as possible on El-Bonanza.

As I could not locate anything locally, I wrote to Stock Research International in Tucson, Ariz., and received the enclosed report. In the meantime, I noticed El-Bonanza trading on the Canadian Dealing Network at 25 cents. My broker told me that the last trade was on July 10, 1998, for 1,000 shares. No one has been able to find the address of directors or the location of their office.

Hans Kellenberger,

Sidney, B.C.

The Stock Research International report was correct up to their current information, but at the end of 1997 the corporate shell of El-Bonanza Mining (elza-c) was reactivated by a Toronto group. The reactivated company applied to the Ontario Securities Commission for a return to trading, and in January of this year the Commission revoked the cease-trade order that had applied to the company’s securities.

The reactivation was a reverse-takeover, in which a private company, Alamos Resources, was sold to El-Bonanza for 5 million shares and a further 5 million warrants. A warrant entitles the bearer to buy one share at 25 cents, and expires on Jan. 12, 2000.

With Alamos came a property in the Sahuaripa mining district, 300 km southeast of Hermosillo in Mexico’s Sonora state. The area is an old silver-mining centre that had closed down during the Mexican Revolution (1911-1917), never to reopen. Alamos had started a program of stream-sediment geochemistry in the early part of the year.

El-Bonanza was listed on the Canadian Dealing Network at the end of April, trading under the symbol ELZA. Trading was halted on July 22 for an announcement that El-Bonanza would also acquire a second private company, Virgin Metals. At presstime, trading was still halted.

Virgin’s business is holding patents on upgrading iron ore, steel making and electromagnetic separation. It is not believed to have any relationship to the Spice Girls’ record label.

The vendors of Virgin receive 14.4 million shares and 2.1 million warrants; 11.2 million shares will remain in escrow, to be released in blocks on closing, and on the first, second and third anniversaries of the closing. The warrants are exercisable for three years, once issued. An exercise price has not yet been fixed.

The transaction is conditional on the successful demonstration of Virgin’s process for producing strontium hexaferrite, a powder used in making ceramic magnets. It also hangs on the cancellation of the 5 million warrants granted to Alamos.

El-Bonanza, accordingly, has gone into the iron ore business, staking two permits in the Labrador-Ungava iron belt in Quebec. On the Hope’s Advance Bay permit, a drill-indicated resource of 459 million tonnes grades 35% soluble iron. On the Kayak Bay permit, there is a drill-indicated resource of 110 million tonnes with the same grade.