Geomaque granted further extension

Geomaque Explorations‘ (GEO-T) principal lender, Resource Capital Fund II, has granted it another extension, to December 17, 2001, to finalize the terms for the restructuring of the company’s US$3.5-million credit and security arrangements. RCF has also deferred all payments required under the credit agreement.

A previous extension granted in mid-October expired on November 6, 2001.

Two installment fees of US$825,000 are also attached to the loan. The first instalment fee was paid in September, but Resource Capital returned US$300,000 of the first installment to cover the pad expansion at the Vueltas del Rio mine in Honduras.

Geomaque’s restructuring plan is expected to include a revised debt repayment schedule, which will take into account the anticipated production schedule from the second leach pad at Vueltas del Rio. Mining at Vueltas del Rio will be suspended until construction of the second pad wraps up in late December. Gold production from pad one will continue from ore already on the pad.

The second leach pad will provide more leaching area and allow enough time to achieve planned leaching recoveries before the next layer of ore is placed on the pad. Pad one was experiencing problem because another level of ore was being added before the primary leach finished with the previous one.

Vueltas del Rio’s reserves are pegged at 5.1 million tonnes grading 2.51 grams gold per tonne. The orebody is expected to sustain an annual production rate of 60,000 ounces, at an average cash cost of US$169 per oz.