Galactic looks to the future

With the recent sale of its 50% interest in the Ivanhoe joint venture in Nevada for US$13.4 million, Galactic Resources (TSE) is a step closer to completing a restructuring of its assets.

The company recently announced plans to restructure its US$31.5 million in 7% exchangeable debentures after missing an interest payment in January. Original terms give holders of the debentures the right to convert to 16.15 common shares of Newmont Mining (NYSE) and 50.72 common shares of Galactic for every US$1,000 face amount until maturity on April 13, 1995. Under the plan, debenture holders will receive 475 common shares of Galactic plus 100 shares of Cornucopia Resources (TSE) and 16.15 common shares of Newmont Mining for each $1,000 in face value.

The restructuring distributes Galactic’s entire investment in Cornucopia. Assuming the debenture holders approve the deal at a meeting this month, and the sale agreement with Newmont goes through, Galactic will be debt free with cash in the bank.

On a fully diluted basis, the company will have about 75.4 million shares outstanding, no debt and working capital of about $7.2 million. Peter Guest, president of Galactic, notes that the company will still have the liability associated with the Summitville mine in Colorado to deal with. The working capital position includes a $5 million reclamation reserve and Guest estimates future costs will add a further $8 million to the cost of closing the operation. Mining operations at Summitville ceased last year, although leaching operations continue.

Guest said the heaps are producing 40-50 oz. of gold per day and the company will continue leaching until levels drop to 15 oz. per day.

As for the future, Guest said the company will not likely be doing any grassroots exploration but will search for a developing project where the company can take a minority interest. He added that the company is not limited to North America or to gold in the scope of projects it will look at.