Belmoral pulls purchase offer

Belmoral Mines (TSE) has withdrawn its offer to acquire working and ownership interests in the Magino and Magnacon gold projects, near Wawa, Ont.

.TBelmoral says that current gold prices dissuaded the company from proceeding with the purchase. Since the bid for the properties was made in late January, the gold price has dropped about US$16 to US$360.90.

Belmoral’s decision has left the projects’ vendors, Flanagan McAdam Resources (TSE), Muscocho Explorations (TSE) and McNellen Resources (TSE), scrambling for alternate solutions to their debt problems. The share price of both Muscocho and Flanagan slipped as the announcement was made, with Flanagan dropping 3 cents to close at 6 cents.

Flanagan and Muscocho were planning to use $9 million in proceeds from the sale of their combined 75% interest in Magnacon to pay off creditors under the Companies’ Creditors Arrangement Act.

The Belmoral offer for the Magnacon mill is the second to be withdrawn since the Magnacon project wasplaced on care and maintenance in December, 1990. Citing environmental problems at the mill, Hemlo Gold Mines (TSE) cancelled its $9-million offer in early January.

The Magino property, owned 50% by Muscocho and 50% by McNellen, continues to operate. Magnacon, shared by Muscocho (25%), Flanagan (50%) and Windarra Minerals (TSE), has been shut down to reduce ongoing costs. Belmoral says it will continue to look for mine production situations in Canada.