Granges, Hycroft sign agreement with syndicate

An agreement has been signed by Granges Exploration and Hycroft Resources and Development with a syndicate led by Bank Gutzwiller, Kurz, Bungener (Overseas) Ltd. for the sale to the syndicate by Hycroft’s wholly-owned subsidiary, Hycroft Resources and Development, Inc., of $17.4 million(US) in bonds due 1992 exchangeable for gold bullion and guaranteed on a joint and several basis by Granges and Hycroft.

The bonds will carry a coupon of 5% and be exchangeable for gold bullion at $17.36(US) per g (approximately $540 per oz) or for an amount equal to the then current market value of the equivalent amount of gold bullion. The redemption price of the bonds at maturity, if not exchanged, will be 105% of their principal amount. Hycroft has agreed, subject to regulatory approval, to issue shares of Hycroft in consideration for Granges’ guarantee of the financing. (Granges owns 56% of the outstanding shares of Hycroft.)

Hycroft owns and is currently developing the Crofoot property in Nevada for production at a maximum capital cost of $21 million. Proceeds of the above issue will be utilized mainly for this purpose. Hycroft also recently issued $ 10 million of 7% convertible debentures due 1992.

Leachable, probable ore reserves on the Crofoot property are estimated by Kilborn Engineering (B.C.) to be 23 million tons averaging 0.025 oz gold per ton. The stripping ratio is less than one ton of waste to one ton of ore. Included in the total are 8 million tons of additional leachable reserves developed by drilling this year.

With the expanded tonnage, the average grade of ore has declined. However, cyanide soluble assays carried out on all samples indicate that this will be offset by a proportional increase in the percentage of gold to be recovered, Hycroft reports. Two 4,000-ton pilot heap leach tests on conglomerate and sinter ore types crushed to 3/8 -inch yielded favorable recoveries in excess of 70% and 80%, respectively.