Madison raises $10 million for Papua New Guinea exploration

Madison Enterprises (MNP-V) has arranged a bought-deal private placement with Yorkton Securities to generate gross proceeds of $10 million.

The investment dealer has agreed to purchase just under 5.3 million units at $1.90 each. A unit will consist of one common share and one non-transferable warrant redeemable for an additional share at $2.30 for a period of nine months. Between months nine and 18, two warrants will be required to purchase an additional share at $2.30. A greenshoe option allows Yorkton to purchase up to an additional 789,600 units under the same terms.

Yorkton will receive a 6% commission of the gross proceeds in consideration for acting as Madison’s underwriter. In addition, Yorkton will receive a broker’s warrant entitling the purchase of up to 526,400 shares at $3 for a period of 18 months.

The net proceeds from the placement will be used by Madison to fund ongoing exploration at the Mt. Kare gold property in Papua New Guinea. The joint-venture project is owned 65% by Madison and 25% by Matu Mining, a wholly-owned subsidiary of Australian-listed Carpenter Pacific Resources.

Kare-Puga Development, a company representing the Mt. Kare landowners, holds a 10% interest that is carried until a production decision is made.

The Mt. Kare property covers 220 sq. km in the central highlands of mainland Papua New Guinea. It is 15 km southwest of the Porgera open-pit gold mine, which contains proven and probable reserves of 79.8 million tonnes grading 4.3 grams gold per tonne, additional measured and indicated resources of 28.3 million tonnes grading 2.4 grams and inferred mineralized material containing a further 26.8 million tonnes grading 2.7 grams.

The Mt. Kare property was at the centre of an alluvial and colluvial gold rush in the late 1980s, during which time roughly 1 million oz. gold were extracted.

Madison had spent $14 million at Mt. Kare up to the end of 1997, completing a total of 14,000 metres in 89 diamond drill holes.

This work has outlined three gold zones — Western Roscoelite, Central and Black — all of which remain open to expansion, and has identified a new discovery in the Lower Maratani area, 850 metres south of the Western Roscoelite zone. These zones cover less than 30% of a 6-km-wide circular magnetic feature interpreted as the surface expression of the Mt. Kare intrusive complex.

The Mt. Kare property covers a 12-km strike length of the Porgera Transfer structure, an important regional feature controlling gold mineralization.

Two distinct types of mineralization are recognized at Mt. Kare. The first is early mesothermal carbonate base metal-gold mineralization occurring in broad zones of northeast-trending brecciation running parallel to the Porgera Transfer structure. This type of mineralization, defined in the Central and Black zones, is analogous to that now being mined at Porgera.

The second type of gold mineralization, described as a late-stage, epithermal, high-grade quartz-roscoelite, found in the Western Roscoelite zone. This mineralization resembles the bonanza-grade reserves previously mined underground at Porgera.

Drilling resumed at Mt. Kare in early May on the strike and downdip extensions of the Western Roscoelite and Black zones. Mapping, auger soil sampling and trenching are under way to develop drill targets on the Lower Maratani and Pinuni Creek prospects and the southern extensions of the Black and Western Roscoelite zones. Madison has retained Watts Griffis & McOuat for a preliminary resource estimate for Mt. Kare.