Vancouver — A US$5-million development loan facility is paving the way for Expatriate Resources (EXR-V) to advance the Finlayson massive-sulphide project in the Yukon.
The junior negotiated the loan with the private equity fund, Resource Capital. The proceeds will be available in two payments. The first US$2 million will be advanced on the closing of the deal and up to US$3 million will be available in US$1-million allotments at Expatriate’s option.
The loan matures Jan. 31, 2005. It carries interest at Libor plus 3%, payable twice a year. All or part of the loan can be transferred into Expatriate shares at a price of 30 per share for the first two years, 35 for the third year and 40 from the fourth year to maturity.
Over the next two years, the equity fund has the right to purchase up to 1 million warrants at 30 each.
Expatriate can repay the loan in full by giving Resource Capital 30 days notice and paying a fee of 2% of the loan amount.
The agreement is subject to due diligence by Resource Capital.
The Finlayson project is a conceptual one. It consolidates the Wolverine and Kudz Ze Kayah deposits in hope of conquering metallurgical problems. Expatriate holds Kudz Ze Kayah under a purchase agreement with Cominco (CLT-T) and has a 60% stake in the Wolverine deposit. The project was recently the subject of a positive prefeasibility study by Expatriate.
Slated to begin this month, the 2001 work program aims to advance the project to final feasibility for the joint development of the two ore bodies. It will include drill-testing targets in the Kudz Ze Kayah area and advancing the permitting requirements for the overall project.
A budget of $705,000 has been approved for environmental studies and permitting for the Wolverine joint venture.
Citing differences of opinion over environmental and socio-economic issues, the company’s joint-venture partner, Atna Resources (ATN-T), has elected not to participate in the work program. It retains the right to contribute at a later date.
Once Expatriate spends the entire $705,000, Atna’s interest in the Wolverine property would drop to 38.5% from 40%.
Wolverine contains a resource of 5.4 million tonnes grading 13.06% zinc, 1.59% lead, 1.43% copper, 1.76 grams gold and 378.1 grams silver per tonne.
At the Kudz Ze Kayah portion of the property, the company plans to drill-test several geophysical anomalies 1 km south of the main deposit, test the western extension and infill drill.
Later in the year, Expatriate hopes to target the GP4F, Redline and Goal Net area, about 6 km southeast of Kudz Ze Kayah.
Kudz Ze Kayah hosts an indicated resource of 11.3 million tonnes grading 5.9% zinc, 1.5% lead, 0.9% copper, 1.3 grams gold and 133 grams silver. Discovered in 1993, the deposit is a gentle-to-flat-dipping, tabular, massive-sulphide body. Mineralogically, it shares many similarities with the Wolverine deposit, including a high selenium content.
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