Atlas poised to restart Nevada’s Gold Bar mine

Using its equity interest in Granges (TSE), New York-listed Atlas is securing financing to resume mining at its Gold Bar mine in central Nevada.

Atlas will receive US$11 million from two Canadian securities firms though a private placement secured by a portion of its 12.7 million shares of Granges. (These shares represent 27.7% of the company.)

The securities firms are also seeking an additional US$4 million in convertible debentures, bringing the total to US$15 million.

The debentures come with a 7% return on investment over their 5-year life and can be converted to stock in Granges at a rate of US$2.35 per share.

If they are fully converted, Atlas will have its interest in Granges reduced by roughly half, although it would still hold the largest block of shares in that company.

From the proceeds of the financing package, Atlas will spend US$7.5 million to restart the mill (which has been on standby) and on prestripping at Gold Bar. Proceeds are also earmarked for exploration and development at three recently acquired gold projects: Doby George and Dixie Comstock in Nevada, and Commonwealth in Arizona.

Meanwhile, Granges will spend US$2.25 million on exploration and development at the Gold Bar over the next three years. Also, it can earn a 50% undivided interest in not more than 15 square miles within the area of interest by completing an independent reserve report on a deposit, provided it is estimated to contain more than than 300,000 oz. gold.

For its part, Atlas reported a net loss of US$19.8 million (or US$1.19 per share) for the fiscal year ended June 30. This compares with a loss of US$9.87 million (or US$1.19 per share) for 1994.

The loss in 1995 is due to a US$11.4-million writedown, which reduces the carrying value of the equity investment in Granges.