Funding of bet to be eased by Westlake, Minera merger

Westlake Industries (VSE) and 23% owned Minera Rayrock (TSE) are hoping to facilitate the development of a jointly held Costa Rican gold project by merging their respective assets into a single company. A 58.7% owned subsidiary of Rayrock Yellowknife Resources (TSE), Minera holds 60% of the Bellavista gold property while Vancouver-based Westlake owns the remaining 40%. Minera is based in Toronto.

The two companies have announced a plan of arrangement under which Westlake would amalgamate with a wholly owned Minera subsidiary.

Under a proposed plan in which no fractional shares are to be issued, Westlake shareholders would receive three shares of Minera for every five common shares of Westlake held.

“Putting 100% of Bellavista into one company should make it easier to finance,” said David Hutton, Minera’s vice-president of exploration. With preliminary open pit reserves standing at 14.2 million tons of grade 0.05 oz. gold per ton, the project could produce as much as 60,000 oz. gold annually.

However, any future development plans at Bellavista hinge on discussions between Minera and representatives of the Costa Rica Central Bank, according to Hutton.

If Minera can be assured that it will be able to repatriate some of the profits from a future mining operation, the company would proceed with a prefeasibility study later this year, he said. “We are seeking assurances that we can gain access to any foreign currency that our exports earn.”

Pending both shareholder and regulatory approval of the merger plan, the amalgamated company would also hold 100% of the Ivan copper project in Chile where reserves stand at 5.9 million tons of 2.4% copper.

The 3.2 million Minera shares owned by Westlake are scheduled to be cancelled, pending completion of the merger which hinges on Westlake raising, on terms acceptable to Minera, $2 million in cash, net of liabilities.