An option agreement has been signed between Coxheath Gold Holdings (TSE) and Toronto-based Ainsley Financial Corp. which will see the latter company invest $2.5 million to complete development of Coxheath’s Tangier gold mine in Nova Scotia. Operations at the mine were suspended in late May, 1989, due to a shortage of working capital. Proven and probable reserves stand at 144,000 tons grading 0.29 oz. gold per ton (cut) and 1.17 oz. gold per ton (uncut).
The new deal gives Ainsley the right to earn a 50% interest in the mine by investing $2.5 million by the end of next year with an initial $1.5 million to be spent by Jan. 1, 1991. The funds will be used to complete mine development, including modifications to the mill and working capital. Coxheath will remain as operator.
Ainsley has also agreed to make option payments of $7,000 per month until the total $2.5 million has been invested. The option funds will be used to cover ongoing maintenance costs at the mine.
When operations were suspended last year, Coxheath had opened a high-grade gold zone on the 30th level about 180 ft. below surface. A narrow vein (4-5 inches wide) on that level averaged 8.14 oz. gold along a 200-ft. strike length which had been mined prior to suspension of operations.
According to the company, preliminary mining operations will now concentrate on additional development of the above zone, which is still open to depth and along strike to the west.
At the company’s annual meeting, shareholders approved a resolution permitting Coxheath to issue shares for $2,045,000 of the company’s unsecured debt. The result will reduce Coxheath’s unsecured debt by 70% with the balance to be paid out of net operating revenues.
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