Colony cooperates with Inco

Colony cooperates with Inco

VANCOUVER (Reuter): Colony Pacific Explorations Ltd said it had agreed in principle with Inco Ltd to carry out mineral exploration and development in Indonesia.

The agreement would form an alliance covering the entire island of Sumatra and which will initially focus on the Kareng and Gedang properties in the southern portion of Sumatra.

Colony said it will have an option to acquire Inco's 100 percent interest in both properties by funding the first US$12 million of exploration and development over four years.

After Colony exercises the option, Inco will have the right to re-acquire a 60 percent interest in the properties by funding the next US$30 million on exploration and development work. Inco will be the exploration manager and will undertake to identify and acquire other prospective properties on Sumatra for option to Colony on similar terms, Colony said.

Inco has agreed to purchase 700,000 units of Colony at $0.73 per unit, each unit consisting of one common share and one warrant exercisable at $1.50 until May 31, 1997, and at $2.50 until May 31, 1998, Colony said.

Inco will have a 50 percent participation right in any Colony financing to raise exploration and development funds for this venture and will assist Colony in raising the senior project financing required to fund Colony's share of mine development costs.

Imperial Metals Corp, which holds 60 percent of Colony's shares, will provide ongoing management and administrative services to Colony.