Polar Star Aims For ‘Bigger Bang For Our Buck’

Polar Star Mining (PSR-V, POSRF-O) has let its option expire for the Chepica copper-gold mine — one of the points of contention during a heated proxy battle over the winter.

Polar Star president and CEO Douglas Willock says the company will keep its original 15% interest in Chepica, located 225 km south of Santiago, near the city of Talca, but the company won’t spend about $5.8 million to buy the remaining 85% from the mine owners.

“When I started doing due diligence and then started looking at all the work our guys have been doing on our other properties that we own that surround it. . . I thought we’d get a bigger bang for our buck by continuing work on our properties,” Willock says.

Polar Star has a 100% interest in about 212 sq. km in the Talca gold district. Chepica is a part of a 13.9- sq.-km land package.

The company recently completed a National Instrument 43-101 report on Chepica as a part of its due diligence before deciding whether to exercise its option.

Willock had wanted to buy the remaining 85% last fall, but the board wouldn’t agree to it, preferring to focus on the company’s other projects.

Eventually, Willock requisitioned for a shareholders’ meeting to replace the board. He was fired by the board but as a major shareholder in the company, led a proxy battle that stretched out over a few months. He was reinstated as president in late April.

Willock says the results of the Chepica due diligence report weren’t disappointing or surprising. “They were pretty much on track,” he said of the results.

Measured and indicated resources for the No. 1 vein total 178,000 tonnes grading 4.1 grams gold per tonne, 9.5 grams silver and 0.51% copper, using an uncapped 0.6 gram gold per tonne marginal cutoff grade.

SRK Consulting said there are exploration opportunities at the mines to expand the size of the project. There’s a new 120-ton-per-day mill at the site that can process sulphide ore.

Willock says it doesn’t make financial sense for the company to buy the mine at this point. But he also says it was worth the company’s time to complete the due diligence.

“You’ve got to know what the facts are before making judgment calls and that’s what we did,” Willock says.

He says the deal from the owners last fall was for the same price but could be paid over time through production. This time around, although the owners were willing to extend the agreement, they wanted cash, Willock says.

“But I felt we better have a look on our properties first and see what comes up over the next while,” Willock says.

Polar Star has a budget of about $650,000 for the rest of 2009. The company plans to do more testing in the Talca region, as well as at its Montezuma copper project in northern Chile, near the city of Calama.

In the first quarter, Polar Star posted a net loss of $1.54 million or 4¢ per share, up from a net loss of $349,905 or 4¢ per share in the first quarter of 2008. Of the $1.54 million, about $1.3 million was due to the costly proxy battle.