Deak Res. obtains financing from Ontario’s heritage fund

The Northern Ontario Heritage Fund has approved a request by Deak Resources (TSE) for support by way of a loan facility for the company’s mining and milling operations at Virginiatown, Ont. Deak President W.G. Cooper said the application for support is in the amount of $4 million, of which $1 million has been advanced. The heritage fund is a provincial government agency administered by the Ontario Ministry of Northern Development and Mines.

The old Kerr Addison mill, which Deak acquired in a bankruptcy sale, has been reconditioned. The mill, currently operating at 1,000 tons per day, is having its capacity increased to 1,500 tons.

Engineering studies have been completed to boost gold-milling capacity at the Kerr mill to 3,000 tons per day, plus the conversion of one gold circuit to handle about 1,750 tons per day of base metal ores to be trucked from Deak’s properties in the Rouyn-Noranda mining camp.

Deak said additional loan funding is under discussion with the heritage fund and other lenders for increased mining and milling operations.

Deak’s major shareholder is Jarden Morgan of New Zealand.

Elsewhere, Deak has agreed, subject to regulatory approval, to purchase the remaining 25% interest in Les Mines Gallen owned by MacDonald Mines Exploration (COATS).

Gallen is the owner of the MacDonald zinc-gold-silver deposit about four miles north of Rouyn- Noranda, Que. MacDonald will receive 700,000 shares of Deak (from the treasury) and 100,000 warrants permitting MacDonald to purchase an additional 100,000 shares of Deak at $1.37 per share for a 1-year period.

Deak currently owns a 24% interest in Gallen. It also has an option to purchase the 51% interest of Noranda (TSE) in Gallen.

Deak has been pumping water out of the MacDonald open pit in preparation for an October mining startup. The company intends to custom mill the MacDonald ore until such time as the Kerr mill has been prepared for processing the sulphide ore. Estimated reserves at the MacDonald mine stand at 1.3 million tons grading 6.35% zinc.