Geomaque raises $7.3 million

Geomaque Explorations (GEO-T) has raised $7.3 million via a brokered private placement of 130.7 million subscription receipts at 5.5 apiece plus another 2.55 million receipts at 6 apiece, to company insiders.

The financing was led by Haywood Securities and included Griffiths McBurney & Partners and Paradigm Capital.

Each receipt entitles the holder to one Geomaque share and half a share warrant. Each warrant is good for one share at 9 each for three years.

The proceeds will be held in escrow until Geomaque completes it previously announced acquisition of Midas Gold, a privately owned company based in the U.K. That acquisition hinges on Midas’ US$6.5-million acquisition of Tasiast gold project in Mauritania, West Africa, from Newmont Mining (NEM-N). Midas hopes to have the deal sealed by the end of June.

The proceeds of the latest offering will go toward completion of a bankable feasibility at Tasiast.

Based on recent drilling, Geomaque has boosted Tasiast’s indicated resource to 8.3 million tonnes grading 2.3 grams gold per tonne, or 611,000 contained ounces of gold. Another 21 million tonnes running 1.8 grams gold, or 1.2 million oz., are classified as inferred resources. The new estimates are based on a cutoff grade of 1 gram gold per tonne.

Geomaque will put its acquisition plans before its shareholders on June 17.

During the first three months of 2003, Geomaque’s net loss was virtually unchanged form the year earlier period at US$1.3 million, or a penny a share).

At the Vueltas del Rio mine in Honduras, Geomaque’s sole producer, gold sales totalled 9,607 oz. at an average realized price of US$349 per oz. Cash costs came in at US$314 per oz. During the corresponding period of 2002, the mine sold 5,277 oz. for US$289 each; cash costs were US$366 per oz.

The mine generated US$332,00 during the quarter, while capital expenditures came to US$114,000. During the year-ago period, the operation ate through US$403,000.

The company says that production at the mine was hampered by mechanical breakdowns to the screening and crushing system. Heavy rains in January also took a bite out of production. Cash costs were negatively impacted as grades slipped to 1.48 grams gold per tonne from 1.95 grams the previous year.

During the recent quarter, Vueltas’ two leach pads were joined to form a single pad with an eye toward increasing stacking capacity in anticipation of the remaining year’s production.

Also during the quarter, Geomaque added a primary jaw crusher and new inclined screen at Vueltas. The changes pushed production both in terms of tonnes processed and ounces placed on the pad to record levels during May.

At the end of March, Geomaque’s cash position had risen to US$2.4 million thanks to the quarters’ three brokered private placements involving nearly 42 million shares and three-year warrants priced at a dime apiece. Long-term debt was unchanged at US$2.4 million.