Twin plans diamond spinoff

Twin Mining (TWG-T) has retained M Partners to arrange financing for a new diamond exploration vehicle designed to increase the visibility and unlock the value of the company’s gold and diamond assets.

The new subsidiary, Diamondco, would acquire all of Twin’s diamond exploration assets, including the Brodeur property on Baffin Island and the Torngat property in Quebec. In return, Twin will receive shares in Diamondco equal an independent valuation of the properties.

The transfer hinges on Diamondco’s financing, and M Partners will use its best efforts in a $5 million private placement, with at least $1.5 million taking the form of common shares and the remainder being flow-through shares. Proceeds will go toward exploration and for working capital. M Partners will be paid a cash commission equal to 7% of the gross proceeds; it will also get warrants good for 7% of the number of shares sold. The warrants will be exercisable at the offering price for 18 months.

Diamondco will focus its efforts on Twins existing diamond properties, while pursuing other potential acquisitions. Meanwhile, Twin will continue development of its Atlanta gold project, 60 miles east of Boise, Idaho.

At Atlanta, Twin recently signed a memorandum of understanding with the U.S. Forest Service that allows for the completion of the environmental impact statement (EIS) process. The company says that during the past 2 years, it has substantially completed baseline environmental studies in anticipation of the EIS. The EIS is a prerequisite to obtaining a mine construction permit.

Atlanta is envisaged as an open-pit, heap-leach operation producing an average of 100,000 oz. annually over 10 years. Cash costs at the US$37.9-million project are pegged at US$188 per oz.

At last count, proven and probable reserves stood at 13.7 million tons grading 0.06 oz. gold and 0.16 oz. silver per tonne, or 0.039 oz. gold-equivalent. The waste-to-ore stripping ratio is 3.39:1.

Twin acquired the project in 1985 and has faced environmental challenges as it works to revive the past-producing property.

Twin says it plans to distribute all or part of its Diamondco shares to existing Twin shareholders. The plan is subject to regulatory approval.

Shares in Twin slipped 1.5 to 12.5 in heavier-than-normal trading in Toronto following the news on Mar. 28.