Geomaque raises $7.3m, eyes Midas Gold

Geomaque Explorations (GEO-T) has raised $7.3 million via a brokered private placement of 130.7 million subscription receipts priced at 5.5 apiece, plus 2.5 million receipts at 6 each, for company insiders.

Each receipt entitles the holder to one Geomaque share and half a share warrant. Each warrant is good for one share at 9 each for three years.

The proceeds will remain in escrow until Geomaque completes its previously announced acquisition of Midas Gold, a privately owned company based in the United Kingdom. Midas recently paid US$6.5-million to acquire the Tasiast gold project in Mauritania, West Africa, from Newmont Mining (NEM-N).

Geomaque CEO John Hick expects the Midas acquisition to wrap up by late June. Under a previous deal, Australian-based miner St Barbara Mines was to be brought into the fold. However, that deal has been scrapped, and Hick says any deal with the Aussies would have to be negotiated from scratch.

He adds: “We’ve backed away from the three-way deal and agreed that once we finish the Midas acquisition, and St. Barbara has done its own restructuring, we will sit down and see if there is a deal to do. If we can negotiate something that makes sense, then we would put that to shareholders. Really, it depends on St Barbara.”

Tasiast

The proceeds of the recent offering, which was led by Haywood Securities and included Griffiths McBurney & Partners and Paradigm Capital, will go toward a bankable feasibility at Tasiast.

Based on recent drilling, Geomaque has boosted Tasiast’s indicated resource to 8.3 million tonnes grading 2.3 grams gold per tonne, or 611,000 contained ounces gold. An additional 21 million tonnes running 1.8 grams gold, or 1.2 million oz., are classified as inferred. The new estimates are based on a cutoff grade of 1 gram gold per tonne.

“Infill drilling in Mauritania continues to go well, and we’ll put out an update on that drilling in due course,” says Hick.

Geomaque will put its acquisition plan before its shareholders in mid-June. If approved, the deal will close by late June.

During the first three months of 2003, Geomaque’s net loss was virtually unchanged from the corresponding period of 2002 at US$1.3 million, or a penny a share.

At the Vueltas del Rio mine in Honduras, Geomaque’s sole producer, gold sales totalled 9,607 oz. at an average realized price of US$349 per oz. Cash costs totalled US$314 per oz. During the corresponding period of 2002, the mine sold 5,277 oz. at US$289 each. Cash costs were US$366 per oz.

The mine generated US$332,000 during the quarter, while capital expenditures came to US$114,000, whereas in the year-earlier period, the operation ate through US$403,000.

Production at the mine was hampered by mechanical breakdowns in the screening and crushing system. Heavy rains in January also took a bite out of production. Cash costs were negatively affected as grades slipped to 1.48 grams gold per tonne from 1.95 grams a year earlier.

During the recent quarter, Vueltas’s two leach pads were joined to form a single pad. Plans call for the stacking capacity to be increased in anticipation of the remaining year’s production.

Also during the quarter, Geomaque added a primary jaw crusher and a new inclined screen at Vueltas. The changes pushed tonnes processed and ounces placed on the pad to record levels in May.

At the end of March, Geomaque’s cash position had risen to US$2.4 million — a reflection of the quarters’ three brokered private placements, which involved nearly 42 million shares and 3-year warrants priced at a dime apiece. Long-term debt was unchanged at US$2.4 million.