Silver Standard boosts Challacollo (April 08, 2002)

Vancouver — Results from a 7-hole drill program have increased the economic prospects of the the Challacollo silver-gold property in northern Chile.

Silver Standard Resources (SSO-V) carried out the 746-metre program to test the Lolon vein over a 600-metre strike length. All the holes intersected mineralization, the highest grades being at the northern end of the underground adits.

Highlights include hole 3, which returned 262.7 grams silver per tonne over 22 metres at a down-hole depth of 84 metres, and hole 4, which cut 370.8 grams silver over 24 metres at 66 metres down-hole. Moving 200-500 metres along strike to the north of the historic workings, hole 5 cut 177.4 grams silver over 10 metres, hole 6 hit 68 grams silver over 17.5 metres, and hole 7 returned 72 grams silver over 5.5 metres.

Based on the results, the Lolon vein now holds an indicated resource of 1.38 million tonnes grading 231.6 grams silver and an inferred resource of 4.7 million tonnes grading 244.2 grams silver.

Mineralization is hosted in rhyolites, dacites and andesites that are overlain by conglomerate, sandstone and shale. The property holds four structurally controlled north-south-striking veins that lie 100-200 metres apart and cover a length of more than 2 km.

Silver Standard paid Sociedad Contractual Minera Challacollo (SCMC) $20,000 to conduct due diligence on the property.

Challacollo is 130 km southeast of Iquique at an elevation of 1,500 metres above sea level.

Breakwater tops up coffers

Breakwater Resources (BWR-T), which was facing default on existing borrowing arrangements in November 2001, has arranged to add $18 million to its treasury through a rights offering.

Low prices for zinc, Breakwater’s principal product, had left the company cash-strapped in mid-2001. A banking syndicate and Breakwater’s major shareholder, Dundee Bancorp, bailed the company out at that time, and Breakwater now expects to have enough cash to meet all its requirements in 2002.

The Breakwater offering, which is being made by prospectus, entitles shareholders of record on April 5 to one right for each common share they hold. The right allows the holder to buy a share at 20 and expires on May 1.

If all the rights are exercised, the company will issue 94.5 million shares for net proceeds of $17.6 million. Dundee Bancorp has agreed to take up a minimum of one-third of the issue if it is undersubscribed, thereby backstopping at least $5 million.

The rights prospectus now has approvals from provincial securities regulators. It has not been approved by the U.S. Securities and Exchange Commission, so rights will not be issued to U.S. shareholders.

Placer joins Comaplex in NWT

Comaplex Minerals (CMF-T) has granted Placer Dome (PDG-T) an option to earn up to a 75% interest in the 286-sq.-km Noomut gold property near Rankin Inlet in Nunavut.

To earn its stake, Placer Dome must spend $8 million over five years. So far, it has committed to spend at least $500,000.

The company plans to carry out a surface geophysical survey this summer, followed by 2,500 metres of drilling. The program is budgeted at US$1 million.

Drilling will focus on the property’s Esker gold occurrence. A 1997 drilling campaign returned a best interval measuring 71 metres and grading 2.4 grams gold per tonne, including 6.5 metres of 6.4 grams and 5 metres running 7.2 grams. Drilling will also target other gold occurrences.

Gasp smelter closes doors

The 46-year-old Gasp copper smelter in Murdochville, Que., will close at the end of April

Noranda (NRD-T) signalled its intention to discontinue operations at Gasp in November 2001. The decision is based on the smelter’s age, weak metal prices and unsustainable treatment charges.

The announcement follows a poor fourth quarter, during which the company lost $84 million, leaving it with a $92-million loss for the year. Lower metal prices and restructuring charges were behind the quarterly loss.

The smelter’s 300 employees will be given a severance package and access to a relocation program funded by Noranda, the provincial government and the United Steelworkers of America. An estimated 600 indirectly related jobs will also be lost.

Echo Bay converts notes

Shareholders have given Echo Bay Mines (ECO-T) the green light to retire US$164.2 million of debt by issuing more than 361 million shares.

In early 1997, Echo Bay issued US$100 million worth of notes bearing interest of 12%, payable semi-annually. The excess amount currently owing reflects accrued interest, which would have risen to US$83.8 million by March 2003, when all unpaid interest is contractually payable.

Echo Bay currently has 140.6 million shares outstanding.

Claude finances Seabee development

Claude Resources (CRG-T) has arranged a share-and-warrant issue with Canaccord Capital to develop the Seabee gold mine in northern Saskatchewan.

The company will issue 5 million shares and 2.5 million purchase warrants for $5 million. Warrants, which expire in one year, can be exercised at $1.25 for a common share.

Regulators have yet to approve the financing, which is expected to close April 23.