Having no cash to spare for exploration,
The offer, which is being brokered by Haywood Securities, entails more than 22 million treasury shares priced at 6.75 apiece. After the deal’s closing, the shares are subject to a 4-month holding period.
Some of the net proceeds will be funneled to the Vueltas del Rio gold mine in Honduras, where exploration crews are sizing up known areas of mineralization. Earlier this year, Geomaque halved the mine’s reserves to reflect actual mining costs and recovery rates.
The pit shell now encloses 2 million tonnes of ore grading 2.47 grams gold per tonne.
Vueltas del Rio, which is now Geomaque’s sole source of production, cranked out 14,760 oz. in the first half of the year. The San Francisco mine in Mexico, which had been on leach-only mode since reserves were depleted in November 2000, made a nominal contribution.
Operational improvements showed in the second quarter, reflecting the completion of Vueltas del Rio’s new leach pad in February. The pad was built to replace the original one, which was so poorly managed that, by the end of 2001, just 10 months after production began, Geomaque had to suspend mining and restructure itself both financially and managerially.
Geomaque says the new pad is operating as expected, having surpassed recovery rates of 70%. The old pad yielded 32,576 oz. from the 740,000 tonnes of ore stacked on it.
Geomaque now expects Vueltas del Rio to produce 35,000-40,000 oz. in 2002. This includes the 5,499 oz. drained from the old pad.
Geomaque has not provided any cost forecast, but operating costs averaged US$272 per oz. in the second quarter. Since Geomaque sold its production at US$316 per oz., the mine actually contributed US$420,000 in cash.
Geomaque lost US$1.8 million (or US2 per share) in the second quarter, or US$600,000 more than in the comparable period of 2001, when revenue was half as strong. Similarly, losses in the first six months of the current year rang in at US$2.6 million (US2 per share) and revenue at US$4.6 million, compared with US$2.4 million (US5 per share) and US$3.5 million, respectively, in the first half of 2001.
On June 30, Geomaque had a working capital deficit of US$1.3 million and US$480,000 in cash.
Geomaque has just under 118 million shares outstanding, which excludes any dilution from the private placement or from unexercised options/warrants.
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