Rankin Inlet (Feb 12/03) - Sakku Investments Corp. is going after the largest undeveloped gold project in Canada.

Sakku, a wholly owned subsidiary of the Kivalliq Inuit Association (KIA) and Andaurex Industries Ltd., announced their intention to pursue WMC's 56 per cent interest in the Meliadine West property this past week.

The gold project is located about 20 kilometres north of Rankin Inlet.

Andaurex president Gregory Bowes says his company feels Meliadine is the most promising undeveloped gold project in Canada.

"Our strategy is to build a public company around Meliadine and the best way to do that is to get local people involved," says Bowes.

"We've spent a fair amount of time and energy on due diligence in investigating this possibility and we're happy with it."

About $70 million has already been spent on the Meliadine West property, which reportedly contains 4.5-million ounces of gold.

Meliadine has been for sale since WMC announced its intentions to sell its gold properties about 18 months ago.

Andaurex was put in touch with the KIA after contacting Nunavut Tunngavik Inc. about the property.

The deal is structured so that if Bowes is successful in striking a deal with WMC, Sakku would have the right to buy the property interest.

Sakku would then sell the interest to Andaurex in exchange for shares in the company.

The net result would see Andaurex becoming the major shareholder and Sakku the controlling shareholder.

Bowes says Andaurex, a publicly listed company, plans to raise project-development money through the stock market.

"A big part of approaching the project this way is that Andaurex will be able to raise money in the market to finance the project, and Sakku will benefit from owning a piece of the public company that develops the mine and have greater control over the process.

"Hopefully, it will turn out to be a win-win situation for everybody."

Spiteri Geological & Mining Consultants and ProMin Consultants will be providing the technical mining expertise.

Combined, the two have more than 60 years of mine-development expertise, including a number of Northern projects.

"The principal of Promin was in charge of the feasibility study at Izok Lake, south of Bathurst Inlet, so these guys are pretty familiar with the challenges associated with operating in the North."

Bowes says there are other benefits to Inuit from this type of arrangement.

He says the deal will allow local people to play a prominent role in deciding what's going to be done with training, employment, business opportunities and environmental protection.

"Inuit will be part of the process in deciding what needs to be done, so it gives them both participation and greater control throughout the process."

Partners hold right of first refusal Bowes says he began seriously looking at the project in February 2002 and spent a year developing the process before signing an agreement.

He says his company plans on sitting down with Meliadine's current owners as soon as possible, but it's impossible to put any sort of time frame on the negotiations.

It addition to WMC's 56 per cent share in the Meliadine West property, Cumberland Resources and Complex Minerals each control 22 per cent.

There is a right of first refusal on the property, meaning before WMC can sell its interest, it has to offer it to the other two partners.

"We're looking at this as a four-way negotiation and we pretty much have to get all parties to agree on whatever it is we decide to do in order to move this project forward.

"This deal may seem somewhat complex to people who are not involved in the industry a lot.

"I don't see it as particularly complex. It's just a question of how long the negotiations take."

Bowes says if the arrangement succeeds, it will be the first time Nunavummiut have the opportunity to participate in the companies developing the project.

"In addition to getting employment training or Northern spending benefits -- which they'd get anyway -- Inuit also have the benefit of having a significant ownership position in the company that's developing the property.

"There's an economic benefit as well as a control and participation benefit."