Hemlo puts $28 million into Central Crude play

This $18-million is a loan repayable from future production.

In return for providing the future funding, Central has issued Hemlo Gold 1.5 million share purchase warrants which give the company the right to buy one share from treasury at $7 per share.

According to Central Crude president Richard Nemis, the Hemlo Gold deal will provide “access to sufficient capital to cover our anticipated needs.” The company has 5.46 million shares issued and outstanding. The Hemlo Gold deal, if fully exercised, will result in 8.5 million shares outstanding. Hemlo would then become the major shareholder, with a 44% interest.

Hemlo, which acquired a 60% interest in the large property, has met with success from exploration. Hemlo has discovered several gold mineralized zones displaying the potential for hosting significant tonnages.

This is a major program employing seven diamond drills.

Exploration and development expenditures to the end of ’89 are expected to reach $60 million. This will almost certainly be followed by mill construction.

With its current 44% direct share interest in the Central Crude company and a 60% joint venture interest in the property itself, it is expected that two Hemlo representatives will shortly be appointed to the Central Crude board.

In addition to the $38.2 million of new funds assured under the above senior financing, Central Crude still has some $1 million on hand from its earlier financing.

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