River strikes deal for Edwards mine sale

Strike Minerals (YKS-T) has agreed to acquire the mothballed Edwards mine in Algoma, Ont., River Gold Mines (RIV-T).

Strike paid $20,000 on signing the deal and must issue River 500,000 shares plus and 500,000 share purchase warrants at closing. Each warrant allows River to buy one Strike share for 20 for one year from closing. Strike must also pay another $30,000 in cash at closing.

The deal is expected to wrap up on June 28, and is subject to regulatory approval.

Last July, River decided to close the mine and put it on a care and maintenance until gold prices showed significant improvement, at which time deep exploration on the property would resume.

Mining at the Edwards mine wrapped up in September as reserves were depleted. The mine churned out more than 140,000 oz. of gold over the last five years.

River Gold Mines enjoyed record gold production and a return to profitability during 2001, thanks in part to a switch to longhole mining methods and development of higher grade ore at the Eagle River mine near Wawa, Ont.,

Net earnings rang in at $930,000 (or 3 per share) on revenue of $38.2 million, compared with the year-ago loss of $7.2 million (23 per share) on $35.4 million.

Gold production was a record 89,900 oz. at a cash cost of US$198 per oz., compared with 85,100 oz. at US$223 apiece in 2000. The company realized US$271 per oz. for its gold in 2001, US$9 per oz. off the pace in 2000.

Looking forward, River expects to produce 75,000 oz. of gold at lower cash during 2002, costs thanks to commissioning of the new shaft at Eagle River. After wrapping up the shaft sinking, River plans on refocusing its efforts to building reserves.

At the end of 2001 River’s total proven and probable ore reserves were 1 million tonnes grading 9.8 grams gold off slightly from year-end 2000. The company’s cash and equivalent position stood at $7.5 million.