Northern Orion buys Argentine, Cuban assets

In a move aimed at establishing a presence in Latin America, Northern Orion Explorations (VSE) has announced plans to buy an Argentine subsidiary from California-based American Resource (NASDAQ).

Northern Orion will pay 15 million shares for the subsidiary, the dollar value of which is about $37 million.

At the same time, Northern Orion will acquire two Cuban properties held by Miramar Mining (TSE), in return for 24 million shares. The dollar value of this transaction is about $60 million. Miramar currently owns 51% of Northern Orion.

Northern Orion already holds more than 30 properties in Argentina, including more than 200,000 hectares of exploration rights in the Santa Cruz gold district. These holdings will be augmented by the acquisition of the Argentine subsidiary, Recursos Americanos Argentinos, which owns all of American Resource’s interests in that South American country, including the San Jorge copper-gold porphyry and the Agua Rica copper-gold porphyry.

The former property, situated in Mendoza province, was explored in the 1960s and 1970s, and again in 1993 by American Resource. To date, 11,400 metres of drilling have served to define a resource of 59 million tonnes grading 0.85% copper and 0.24 gram gold per tonne ( or 1.1 billion lb. copper and 457,000 oz. gold).

The Aqua Rica porphyry, in the Catamarca province, was first drilled in the 1970s. No further work was done until 1994, when BHP acquired an option on a 70% interest in a joint venture. Drill results indicate a resource potential of more than 100 million tonnes, with a grade exceeding 1% copper-equivalent.

Other assets affected by the agreement between Northern Orion and American Resource include the Valle de Uspallata properties, near the San Jorge property, and American Resource’s half interest in the Los Petisos sulfur project.

The two Cuban plays involved with the deal with Miramar are Mantua (copper-gold) and Delita (gold).

Miramar will sell its Cayman subsidiary, Minera Mantua, which owns all of its mineral interests in Cuba. The acquisition gives Northern Orion the right to earn a half interest in both properties.

The Mantua deposit is a high-grade, secondary-enriched copper deposit with an estimated resource of 4.8 million tonnes averaging 3.38% copper at a 1.3% cutoff, with the potential for another 6.5 million tonnes of lower-grade material averaging 0.52% copper. Gold will also be recovered as a byproduct. A production decision will be made based on a feasibility study which is expected by the summer.

The Delita project, the largest known gold resource in Cuba, contains an estimated resource of 6 million tonnes grading 3.9 grams gold and 40 grams silver per tonne, plus an additional resource of 9.7 million tonnes grading 3.1 grams gold and 25.5 grams silver per tonne. In addition, Miramar controls a 450-sq.-km concession surrounding the Delita deposit.

Northern Orion currently has 15.2 million shares outstanding. The 15 million new shares will give American Resource a 28% non-voting interest in Northern Orion, with the voting trust going to Miramar. And the 24 million new shares increase Miramar’s interest to about 59%.

As part of the deal with American Resource, Miramar has agreed to provide a $10-million loan to fund the development of its San Gregorio gold mine in Uruguay.