July, 1996
Pacific Rim Mining Corp. is a Vancouver-based company
that trades on the Vancouver Stock Exchange (PFG). The company's
objective is to acquire mining exploration properties that have
the potential of becoming producing mines. Following this mandate,
the gold/silver 'Diablillos' and the base metals 'La Colorada'
properties were acquired at the end of 1992. Both properties
are located in the Province of Salta, Argentina. In 1996, the
company expanded its international holdings by the acquisition
of the 'Cerro Blanco' property directly adjacent to the northeast
corner of the company's Diablillos gold/silver property, that is 70% optioned to Barrick Gold (ABX). The
company also acquired a 100% undivided interest in a 82 square
kilometre block in the rich Kalimantan gold belt in Indonesia.
This property is 40 km. south of the Kelian Mine and 120km southwest
of the massive 'Bre-X' gold discovery. This recently acquired
property has sedimentary rocks and intrusives of the same miocene
age which appears to have emplaced mineralization in tertiary
sediments in both the Kelian mine and the Bre-X deposit.
Pacific Rim has incorporated, in 1992, a 100% wholly owned subsidiary company, Pacific Rim Mining Corp. (Argentina), S.A. This subsidiary company has established corporate offices in city of Salta, Argentina from where exploration work is managed. In 1993, Pacific Rim acquired all the intellectual data gathered by BHP Minerals during their three year option on the Diablillos property. In December, 1993, the company completed 1,000m of HQ-core drilling in five holes in the Oculto Zone, the most advanced of the four known gold-bearing zones on the property. Very encouraging results prompted the company to conduct a second phase of exploration by completing a magnetometer ground survey over the entire property and 35km lines of IP survey. In June, 1994, the company contracted 2,000m of diamond drilling in the Oculto Zone. This work resulted in a new summary of proven reserves of 5,132,306 tonnes in all categories grading .07 oz./t gold and 6.9 oz./t silver. The Company's geological consultant has indicated that it is reasonable to assume significant additional tonnage can be discovered in the Oculto Zone which is 'open' in all directions and has clear indications of an extension to the north-east, the location of the company's Cerro Blanco property. As per our news announcement of July 3rd and executed copy of the formal Share Purchase Agreement has been filed with the V.S.E. and BARRICK GOLD CORP> has commenced drilling to earn their interest (see July 11/96 news release).
In 1993. Pacific Rim carried out a satellite imagery study of the La Colorada property and started a compilation of the available regional information on and around this large (55,000Ha) massive sulphide deposit. In 1994, Dr. Raul Leguizamon, a Professor of Palaeontology at the University of Cordoba, carried out sratigraphic-palaeontological studies of the rocks that host mineralization on the property and concluded that their age is similar to those rocks that host mineralization at Mina Aguilar, a world-class deposit of zinc-lead-silver located about 85 km. to the northeast of the La Colorada property. In 1996, the La Colorada property has caught the attention of several major mining companies who have expressed keen interest in pursuing a form of joint venture to perform extensive exploration work on the property. Due to the properties enormous size, company management is inclined to pursue a joint venture mode to further develop this property. As of this writing, several of these major mining companies have taken site inspections of the property and the company has received one written offer to joint venture the exploration work needed to be done and this offer is being considered by management at this time.
The Company owns some time gold/copper mining properties in the Johanson Lake area in central British Columbia called the 'Croy' claims. Recently, Hemlo Gold Corporation has an interest in the area (Soup Claims) adjacent to the company's claims and exploration is underway at this time.
Barrick Gold Corporation (ABX-T) has agreed to purchase a 10% interest in Pacific Rim Mining Corp.'s wholly owned subsidiary, Pacific Rim Mining Corp.(Argentina), S.A. for US $1.5 million with the option to increase their holdings to 70%. The Argentine subsidiary has as its main asset a 100% undivided interest in the Diablillos property. If exercising their option in full (to a production decision) the value to the company will accrue to at least US $10.5 over a four year period plus US $4 million/yr. to a production decision. A comprehensive drill program is underway at this time under the control, direction and management of Barrick Gold Corporation.
A dramatic economic and political turnaround in the last five years has occurred in Argentina. A democratic government is firmly established with a recently renewed mandate of rejuvenating private sector investment and is considered one of the most politically stable in South America. It has dramatically bought down annual inflation to less than 4% per annum, reduced government expenditures and obtained budget surpluses in the last two years, privatized state owned enterprises, and enacted favourable legislation to attract major foreign investment.
Virtually no private-sector mining exploration was conducted in the past thirty years. It is well known internationally, that Argentina has tremendous mining potential and is now quickly developing a supporting infrastructure. The government and the people welcome and encourage foreign investment and are making every effort to facilitate mining investment. To this end, the government enacted the New Mining Legislation which was approved in 1993 and establishes a highly favourable and competitive investment climate. Highlights of this legislation are:
These favourable changes have initiated an exploration boom in Argentina. As one of the 'first' international mining companies to establish offices in Argentina, Pacific Rim is well positioned to take advantage of this exciting business climate.
When a prudent investor prepares to invest in a public company, the question: "Does the purchase price reflect 'real' value?" should come up. At the current market price of around $1.00/share (July, 1996), this is where Pacific Rim Mining Corp. really shines as a BUY! By comparison to other companies, doing the same thing, in the same areas, listed on the same exchange, with comparable Balance Sheets and with comparable dilution ratios, Pacific Rim Mining Corp. should pass any analyst's tests as to value. It is not at all unusual to find gold stocks selling at many times their equity value; (ie. stocks having a market capitalization of say $20 million and a equity or break-up value of say $2 million) With Pacific Rim, just the opposite is true, at this time. If one was to take the 'value' (appraised) of Pacific Rim's property, and assets, less debt and divide that by the number of outstanding shares (undiluted) you could justify a value of over $3.50/share. Now add to that, the value of the completed share purchase agreement with Barrick Gold Corporation (ABX-T), with their management, track record, and exploration expertise together with the normal 'speculative' value of their U$S 10.5 million drilling programme, that is underway at this time, and one could easily justify a share price of Pacific Rim Mining Corp. of $5.00+/share. As a point of interest, in evidencing Barrick's commitment to exploration in South America, they have just announced a bid for the control of Arequipa Resources Ltd., a Vancouver mining company operating in Peru for Can$27.00 per share (cash offer). As a shareholder of Pacific Rim or considering becoming one, and interesting parallel/comparison can be drawn. 'Arequipa' is a company with 33.9 million shares outstanding (Pacific Rim has 8.8 million outstanding) and trading at $20.00+ (Pacific Rim is currently trading around $1.00) They do not have any proven reserves (Pacific Rim has proven reserves and orebody). Arequipa"s results that were reported were"inconclusive" (Pacific Rim's are not). They have experienced difficulty in drilling (Pacific Rim has not) and Arequipa is not drilling at present and Pacific Rim has announced on July 11, 1996 that 'drilling has commenced' by Barrick Gold Corporation on Pacific Rim's Diablillos Property in Argentina. The inescapable conclusion is that as at this time, Pacific Rim is undervalued relative to similar companies and the upside potential is real and credible.
With the exploration, and related financing, of the Diablillos property well underway, with Barrick Gold Corporation, the company can now concentrate on: