Vedron plans $8 m offering for Fuller bet and Belmoral

Toronto-based Vedron (TSE) says it has revised the terms of a previously announced debenture offering, designed to finance exploration at the Fuller gold project and pay back debt owed to Belmoral Mines (TSE). Vedron is proposing a new offering consisting of an $8-million rather than a $16-million convertible debenture announced last September to complete underground exploration at the Fuller project near Timmins, Ont.

Scheduled to be issued in $1,000 denominations with no interest to be paid before maturity, the proposed debentures would mature after five years (or at Vedron’s option after three).

Pending regulatory approval, each $1,000 principal amount can be redeemed for either a certificate for 2.5 oz. gold or 425 shares valued at $2.353. Each $1,000 principal amount is also convertible into 425 shares of Vedron at any time before maturity.

After spending $21 million on the Fuller project, Vedron says it will move ahead toward production if reserves above the 650-ft. level can be increased to 840,000 tons grading 0.18 oz. gold per ton.

A downward extension of the orebody to 2,500 ft. should bring the geological reserve potential up to about one million tons, according to Vedron, which owes Belmoral more than $12 million.

Part of the $12-million debt is secured by a mortgage on Vedron’s Timmins property and a floating charge on all other Vedron assets.

In order to repay the debt, Vedron says it plans to pay out $2 million on closing of the proposed $8- million offering, plus an additional $2 million within a year.

Within 42 months of closing, Vedron will pay out $1.4 million plus interest at 10% in cash flow from mine production.

Under the agreement Belmoral will donate to Vedron the 6.8 million Vedron shares it now holds in proportion to the amount it receives up to $5.4 million. The shares are being issued to allow Vedron to meet the requirements of the debenture or any equity issues announced by Vedron within one year.