Blue Note gets extension on Croinor acquisition

Blue Note Mining (BNT-V) has three more months to tie up its acquisition of First Gold Exploration’s (EFG-V) stake in the Croinor gold project and the Matchi-Manitou property.

The deal was originally announced in July with the closing date set for December, but with the extension Blue Note now has until March 31 to make a final payment of $2.25 million.

The announcement comes just two days after the company said it had closed a private placement which raised $2.3 million by issuing 9.5 million shares.

Blue Note already holds the other 50% of Croinor and would be acquiring First Gold’s 71% stake in Matchi-Maintou. Both properties are located in Quebec’s Abitibi region, near Val d’Or.

The deal gives First Gold the right to maintain a 13.67% stake in Blue Note by participating in future deal. At the time the original deal was announced, First Gold said its motivation for selling came out of a desire to focus on rare-earth elements.

Thus far, Blue Note has paid just $100,000 in cash to First Gold.

The 17.5 million common shares it agreed to issue as part of the deal are to be held in escrow, being released at a rate of 500,000 shares per month over 35 months from the date of closing.

Blue Note made the deal after a prefeasibility study on Croinor was completed in the summer. That study envisioned a 500-tonne-per-day operation producing up to 45,000 oz. gold per year

Croinor hosts a deposit with proven and probable reserves of 690,000 tonnes grading 8.35 grams gold per tonne for a total of 185,000 oz. gold.

Using a 7% discount rate the project’s NPV came in at $35.9 million with capital costs estimated at $26 million and total cost per oz. of gold predicted to be US$715 per oz.