A half-million dollars here, another there…Cazador pursues

An additional private placement totaling $500,000 has increased Cazador Explorations’ (VSE) flexibility in putting the Keystone gold project, near Lynn Lake, Man., into production.

Granduc Mines (TSE) agreed to buy a further 892,860 shares of Cazador at 56 cents each, adding to a previously announced placement of 793,650 shares at 31.5 cents each for a combined total of $750,000. The original placement also included warrants to buy an additional 793,650 shares at 31.5 cents in the first year and 36 cents in the second year.

Cazador can earn a 49% interest in Keystone from DCC Equities by spending $10 million.

The project includes the 1,500 tonne-per-day Lynn carbon-in-pulp mill and the MacLellan mine and mill, as well as mineral properties.

The capital cost of entering production is estimated at $8.2 million, part of which is tentatively secured through equipment leases.

Initial plans call for open-pit mining of the BT deposit and trucking the ore to the Lynn mill, about 17.5 km to the northwest.

The recent placement has allowed Cazador to let the contract for the haul-road upgrade while further financing is being negotiated. A third private placement with Granduc is in the works. It would total 6.3 million shares at 31.5 cents each, including warrants, to the end of 1995, to buy an additional one million at 45 cents.

The large placement is contingent on Cazador securing the remaining $3.5 million required to place the project into production and securing an option or joint venture on the Farley Lake gold deposit owned by Manitoba Mineral Resources. Vancouver-listed Golden Band Resources has an option to earn a 44.83%

interest in Farley Lake from Mingold Resources of Toronto.

David Martin-Smith, a spokesman for Cazador, said the Farley Lake negotiations are continuing.

Granduc had originally set a deadline of May 14 for completion of the financing but has extended it to June 30.

In return for the extension, Cazador has granted Granduc a further one million share purchase warrants exercisable at 70 cents to April 13, 1994, increasing to 80.5 cents each to April 15, 1995. Granduc will also help Cazador in securing the $3.5 million in additional financing as well as in the forward selling of a portion of the planned production.

Production from BT is projected at about 1.3 million grams per year (42,000 oz.) at an average cash cost of about US$203 per oz. based on a yearly mining rate of 525,000 tonnes (577,500 tons) and a recovery of 92%. Reserves are estimated at 1.23 million tonnes grading 2.83 grams gold per tonne (1.3 million tons at 0.1 oz. per ton).

Farley Lake hosts an estimated preliminary open-pit reserve of 1.18 million tonnes grading 4.2 grams per tonne (1.29 million tons at 0.12 oz. per ton). Prior to any of the private placements with Granduc, Cazador had about six million shares outstanding, 496,000 share options and 1.2 million warrants.