A planned merger between Cazador Explorations (VSE) and Granduc Mines (TSE) should go a long way toward raising the required financing to bring the Keystone gold project into production.
Cazador can earn a 49% interest in the Manitoba project from DCC Equities which in turn optioned its interest to Black Hawk Mining (TSE). The capital cost of entering production is estimated at $7.9 million. Granduc had already agreed to provide $2.5 million to Cazador through two separate private placements of shares and warrants. Granduc will now provide the funds through convertible debentures until the amalgamation is complete. Including the $2.5 million in placements and an equipment financing deal through Caterpillar Financial Services, Cazador has arranged all but about $3 million of the required capital.
Cazador will proceed with plans to raise the remaining capital, likely through some form of convertible debenture, said President John Chapman. He added that the amalgamated company will have the advantage of attracting large investors, such as institutions, and that the remaining fund-raising should go smoothly.
Even if additional funding were not available, Granduc is in good financial shape with working capital of more than $5 million prior to any advances to Cazador under the private placement agreement.
Plans include initial mining of the BT deposit which is estimated to contain about 1.36 million tons grading about 0.083 oz. gold per ton. Based on a yearly mining rate of 580,000 tons and recoveries of about 92%, the project is expected to produce about 42,000 oz. per year at an average cash cost of US$203 per oz.
Negotiations to include the nearby Farley Lake deposit in the development are continuing.
Manitoba Mineral Resources owns the deposit while Golden Band Resources (VSE) has the right to earn a 44.8% interest from Mingold Resources. The Farley Lake deposit contains an open-pit reserve of about 1.3 million tons grading 0.12 oz. gold.
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