Reunion gets cash, moves ahead at Matthews Ridge

Some big resource investment houses have signaled their faith in Reunion Gold‘s (RGD-V) Matthews Ridge manganese project in Guyana, and market participants took their cue.

A syndicate of underwriters led by BMO Capital Markets and Dundee Securities are buying 20 million Reunion shares at $1.75 each, which will put nearly $35 million into Reunion’s coffers.

The underwriters can increase their stake by 15% or 3 million shares, up to 48 hours before the deal closes on May 2.

The support of such big names in investment banking inspired faith from the market overall as evidenced by the company’s shares climbing 18% or 35¢ to $2.35 on a heavy volume of 2.8 million shares traded in Toronto on March 29.

Reunion will plough the new capital into its Matthews Ridge project, with dollars earmarked for resource definition drilling, metallurgical studies and a prefeasibility study.

Matthews Ridge sits 260 km northwest of the capital of Georgetown and was a producing mine for Union Carbide between 1962 and 1968. The mine turned out more than 1.7 million tonnes of 37% manganese concentrate during that time.

While the mine has remained shuttered since the late 1960s, Reunion says some of the facilities at the site are recoverable.

But the site has more than some old milling equipment lying around, as it also has three zones with non-compliant historic resources.

The first is Matthews Ridge with 2.6 million tonnes grading 33.4% manganese concentrate, the second is Pipiani with 840,000 tonnes of 33.4% manganese concentrate and the last is the North Prospect with 100,000 tonnes of 33.4% manganese concentrate.

That estimate was done in 1985 by GGMC and DPRK.

Reunion describes mineralization as being confined to Barama Group rocks, with the Matthews Ridge formation being of low-metamorphic grade pelitic sediments underlain by chlorite schist and after mafic volcanics of tholeiitic affinity.

Mineralization occurs as black massive beds, manganese-bearing quartizites and quartizitic manganese beds. The bed are anywhere from 2 to 20 metres thick and the explored mineralized zone is 12 km long.

But perhaps the key to the story, and its ability to draw such a large investment, is the potential for easy and low-cost development.

Being 50 km from a port, having low infrastructure requirements and significant resource growth potential, Reunion says there is a real possibility of developing a mine in a relatively short time.