Financing vehicle opens door at end of flow-through tunnel

There can be little doubt that flow-through financing has facilitated the discovery of several significant gold deposits in Canada. But when a company, particularly a small operator, decides to mine one of these deposits, financing becomes a problem.

Flow-through funds cannot be applied to high capital cost items suc h as mill construction.

Now there’s a new way for junior companies to raise that necessary capital. Two companies, CMP Milling Corp. and Orocon Inc., have recently been set up in Toronto to open a door through the wall that faces many companies at the end of the flow-through tunnel.

Orocon was formed by Michael Ross, Graham Dickson and John Fox — three men known in the industry for their expertise in modular mill design and construction. They worked on Total Erickson’s 300-tpd gold mill at Mount Skukum in the Yukon, for example and Muscocho Exploration’s 400-tpd silver-gold mill at the Montauban mine near Quebec City.

Through CMP Milling Corp., which was set up by Jean Guy Masse and Gerald McGrath as a subsidiary of CMP Funds Management to hold their partial ownership of Orocon, they are confident they can fully finance the construction of modular mills ranging in size from 50 to 750 tons per day, costing anywhere up to $20 million.

“If major financing is needed which cannot be provided by the shareholders of CMP, Orocon could go public,” Mr Masse says.

Turnkey modular mills would be leased to a mining company on a royalty or charge-per-ton basis. “Having a piece of a gold producer,” says Dickson, “is the incentive our shareholders have for assuming the risk of mill construction.” But these risks are very low compared to the risks taken by flow-through shareholders for grassroots mineral exploration.

Orocon has a fully equipped metallurgical testing lab in Mississauga complete with atomic adsorption and fire assay services.

“We are confident we can design and build mills at a cost significantly lower than established engineering companies such as Bechtel, Kilborn, Wright and Acres, Davy, McKee can,” Mr Dickson says, “by eliminating costly overhead.” Also, they say they can get away with fewer engineering drawings by using computer-aided-design technology and can use more reconditioned (used) milling equipment than the established engineering companies do.

Orocon is well financed with about $600,000 in working capital and has three projects on the go.