Royalstar, Attwood Gold to join forces

The merger of Royalstar Resources (RYQ-V) with Attwood Gold (ATW-V) is being negotiated.

John Young, Royalstar’s current president, will preside over the new company, which will retain the name Attwood Gold.

The deal calls for shareholders of Royalstar to exchange five shares for one share of Attwood. The merged company would have a total of 9 million shares (fully diluted). In addition, Attwood would make a bridge loan of up to $1 million to Royalstar.

Among Royalstar’s chief assets are the Tonkin Springs and King of Kings gold projects, in Nevada and Montana, respectively.

Tonkin Springs, which lies in the Battle Mountain trend, is 60% owned by Gold Capital (GOCP-Q), with the remainder held by U.S. Gold (USGL-Q). Royalstar owns 51% of Gold Capital. After the completed merger, the new company could own as much as 60%.

An audit by Behre Dolbear concluded that the deposit hosts 1.3 million oz.

gold, including proven and probable reserves of 956,968 oz. The company expects to produce 100,000 oz. gold during the first five years of operation.

Operating costs are projected at US$243 per oz., and a late-1996 startup is envisaged.

Royalstar can earn a 65% interest in the King of Kings property, where a 1993 drill program indicated a resource of 1.4 million oz. gold in the Kearsarge and Oro Cash vein systems.

Royalstar also owns several targets in Labrador and Zimbabwe.

Attwood brings to the merger a strong financial position, and two promising exploration programs — one in Mexico, the other in Eastern Europe.

Attwood has retained the firm of C.M. Oliver of London for the sale of special warrants. Gross proceeds from the private placement would be up to US$8 million. The company has also raised $4.5 million from another private placement.

In Mexico’s Baja California Sur, Attwood has started work on El Volcan, a 39,500-hectare concession on the eastern side of the peninsula. It is reported to be the largest gold-related alteration system in the region. In addition, the company has the right to buy 5,000 hectares in the Venada concession, farther south.

Attwood has also secured a 32,000-hectare land package in the Pueblo Nuevo district of Durango state.

The company has an exclusive option to buy 70% of Takama Minerals, a Slovakian junior that holds interests in five mineral properties in that country. The properties cover 68 sq. km, and are near the capital of Bratislava, in the West Carpathian Mountains.

At the 30-sq.-km Hnusta property, also in Slovakia, sampling results across an 11-metre-long trench averaged more than 1 oz. gold per ton. The company is optimistic about the early-stage potential of this property.