Doug Ashbury
Northern News Services

NNSL (July 12/99) - A significant Nunavut gold property is being sold to Cambiex Explorations, it was announced.

Montreal-based Cambiex has a deal to pay $38 million in four instalments over six years to BHP Diamonds for its Hope Bay properties. Cambiex could ultimately prepare a feasibility study on constructing a mine in the Hope Bay belt.

"It's a very high grade," Cambiex investor relations manager Victoria Putnam said of the Hope Bay properties.

Grades are estimated at a very respectable 15-17 grams per tonne or about one-half ounce per tonne. Giant's 1998 production was about a third of an ounce per tonne.

The Hope Bay properties, 110 kilometres southeast of Cambridge Bay, include Boston, Doris Lake and Madrid and have an inferred resource of 4.2 million ounces of gold.

"Cambiex management believes the Hope Bay belt has the potential to become a large gold camp comparable with other greenstone belts in Canada, and intends to further BHP's excellent work to date by continuing the exploration process, with a view to confirm and extend the known resources," the company said.

If the sale is completed, BHP's NWT-Nunavut holdings will consist exclusively of its 60 per cent stake in Ekati and its related claims. The BHP Diamonds sale of Hope Bay is part of a larger move by Broken Hill Proprietary to sell some of its assets.

BHP has been looking for a Hope Bay partner, or to sell the property, for about a year, BHP spokesperson Graham Nicholls said Wednesday.

Since 1991, BHP has spent tens of millions of dollars on drilling, bulk sampling and geophysical work to bring the property into the advanced exploration category.

But last year, BHP discontinued its Hope Bay exploration program.

One of the geological characteristics that makes the Hope Bay properties interesting is they "cover the entire belt," Nicholls said.

The sale will also put Hope Bay in the hands of a company that concentrates on gold, Nicholls said.

Cambiex's largest shareholder is Cambior Inc. Cambior operates seven gold properties. It's 1999 production target is 650,000 ounces at $215 US per ounce. Cambior's gold hedging program has returned a $57 US per ounce premium over the last 10 years.

Despite the move to sell the property, BHP does "maintain an interest through warrants," Nicholls said. The warrants give BHP the option to buy stock in Cambior in the future.

Over a 90-day period commencing June 28, Cambiex will be conducting a due diligence review. During the 90 days, Cambiex can opt out of the deal. After 45 days, Cambiex is required to pay BHP $1 million.

Other terms of the deal include:

* $7.4 million not only on closing but also one year and two years after closing.

* $11.8 million on the earlier of the start of commercial production or six years after closing.

* BHP may elect to take the payments in cash, Cambiex shares, or equal blend of Cambiex and Cambior shares.

* Cambiex will issue BHP six million non-transferable warrants with various conditions and prices to buy Cambiex common shares.

* Cambiex will also reimburse BHP for up to $1 million worth of goods at the camp.

* Upon closing, the $1-million deposit will be credited to the first payment. If Cambiex opts out after the 45-day period, it will forfeit its deposit.