Financing heats up action on Professor’s Duport bet

With new financing in hand to the tune of a minimum $4.5 million, Consolidated Professor Mines plans an accelerated exploration and development program at its Duport gold property at Shoal Lake, near Kenora in northwestern Ontario.

The program, slated to start in the latter half of this month, should put the company in a position to make a production decision by June, 1987, President G. R. Cunningham-Dunlop tells The Northern Miner.

The purpose of the program is 2-fold. One is to block out new reserves in the recently discovered northern extension of the deposit, while the second is to increase mineable reserves in the Main and East zones, Mr Cunningham- Dunlop explains, adding that the overlying rationale is to boost mineable reserves in all the zones to support a 140,000-ton-per-year production rate.

Since 1983, some $6 million in surface and underground exploration on Duport had been funded by joint venture partner Umetco Minerals Corp., a subsidiary of Union Carbide Corp. And this past winter a surface drilling program was partially funded by an Ontario government grant. However, since Umetco sold its interest in the joint venture early this summer, Consolidated Professor lacked the essential ingredient for an extensive underground program/ funding. Two deals

That has all changed, thanks to two separate financing agreements.

An inital $2.5 million will be raised by the issuance of up to two million shares on a flow-through basis at $1.25 per share to Conwest Exploration. An additional $2 million is to be provided by the sale of treasury shares through a private placement offering by Vancouver- based Haywood Securities.

Shareholders will be asked to approve the issuance of units to be offered by Haywood at $1 per unit. Each unit consists of one share and one-half a warrant to purchase one common share at $1.25 per share.

If the Haywood agreement is approved, Conwest will receive an equal number of warrants to earn flow-through shares at $1.70 per share, by incurring qualifying exploration expenditures on the Duport property.

These two transactions could provide a maximum of $7.4 million, before costs, for the Duport project and other corporate requirements.

As of Dec 31, 1985, Consolidated Professor had 7.9 million issued and outstanding shares. If all the agreements are approved and all warrants are exercised, the outstanding and issued shares would increase to 13.9 million. At the end of the day, Conwest would hold a maximum of three million shares or a 21.5% interest in the company. Conwest strong

Conwest has enjoyed a strong financial position for the past decade and indeed, earlier this year it had slotted between $50-$100 million for future acquisitions. Sometimes considered more of an oil and gas player, Conwest has placed a priority on maintaining a number of interests in the mineral sector, either through joint ventures, shares or straight acquisition.

Colin C. Coolican, Conwest executive vice-president, tells The Northern Miner that Consolidated Professor provides an attractive investment opportunity. He adds Conwest has no plans of increasing its stake in the company nor will any Conwest people be on the Consolidated Professor board. “We view it as an attractive nonproducing gold vehicle,” he says. He also notes that much work has been done on the Duport property with a reasonable amount of reserves indicated. Reserves at Duport

Current reserves at Duport stand at 1.5 million tons grading 0.34 oz gold per ton. Of that amount, 119,951 tons grading 0.41 oz gold per ton is proven, while 624,899 tons grading 0.34 oz are in the probable category.

Mr Cunningham-Dunlop says the plan is to block out sufficient mineable reserves to approximately 600,000 tons in the proven category in the East, Main and northern extensions. Underground program

The upcoming work program includes the extension of the existing workings from the 530-ft level to the 660-ft level, explains Mr Cunningham-Dunlop. A north- south drift will also be driven 1,100 ft in order to establish drill stations for detailed exploration of the northern extension. The south end of this drift will run into the Main zone, where work will focus on upgrading probable reserves to the proven category.

A drift will also be driven 1,300 ft at the 270-ft level that will be used to upgrade probable reserves in the Main zone as well as establishing continuity in the upper levels. Raises between levels to confirm vertical continuity are also planned.

Underground and surface drilling is also planned, although surface drilling will have to wait until January, says Mr Cunningham- Dunlop. Drilling in the northern extension will go to a depth of 900 to 1,000 ft, while Main zone drilling will go to a depth of 1,400 ft. Currently, the deposit remains untested below a depth of 1,100 ft throughout most of the its length, and the north lenses have not been drilled below 700 ft.

For the six months ended June 30, Consolidated Professor posted a net loss of $135,001 compared to a net loss of $104,326 in the first half of 1985. Cash at the end of this year’s first half amounts to $804,727 versus $522,604 at the end of the same period last year.