Privately-held Hunter Dickinson Group plans to float another new company on Pelangio Mines‘ (PLG-T, PLGOF-O) developing Detour Lake property, around 180 km northeast of Timmins, Ont.
Under the scheme, which requires approval by regulators and Pelangio’s shareholders, Pelangio would transfer the Detour Lake property, including Block A, to newly formed Detour Gold.
In return, Hunter Dickinson would pay Pelangio a non-refundable $1-million deposit, with another $4 million paid on closing. Pelangio would also receive 20 million shares in the new company at an issue price of $3.00 apiece. The shares are expected to represent a 50% stake in the new company.
“With nearly two million ounces of gold resources, the Detour Lake project is now ready for the next level of development,” said Pelangio CEO Ingrid Hibbard in a prepared statement. “We feel that this can best be accomplished by the expertise of Hunter Dickinson Inc., one of the most successful junior resource issuer management teams, and supplemented with the exploration knowledge that we have gained over the last 10 years.”
Under the plan, Detour Gold would fund the project until the earlier of termination or closing of the proposed transaction; the latter is slated for early 2007. Funding would come from a $10-million private placement of at least 5 million shares, and up to $15 million raised via an initial public offering of between 5 and 10 million shares.
If the deal falls through, Pelangio gets to keep the property and down payment. It would also convert any expenditures by Detour Gold into a maximum of 1.6 million Pelangio shares at $1.67 apiece or the minimum price allowed by the TSX, whichever is higher.
When the dust settles, Pelangio would have two representatives on Detour Gold’s six-member board of directors.
The plan will be put to Pelangio shareholders at a special meeting planned for October. The company has already lined up the support of shareholders representing around 36% of its more than 67 million outstanding shares.
At last count, Detour Lake was home to an indicated resource totalling just shy of 2.5 million tonnes running 2 grams gold, or around 159,500 contained ounces of gold. Another 23.4 million tonnes of inferred material grades 2.29 grams gold.
The property surrounds Detour Lake mine, which produced some 1.8 million oz. of gold from 1983 to 1999. It also includes Block A that is currently subject to an option agreement with Trade Winds Ventures (TWD-V, TWDIF-O). Pelangio is currently verifying that Trade Winds’ winter drilling expenditures have earned it a 50% stake in the property.
Detour Gold plans an aggressive winter exploration program at significantly boosting resources in anticipation of a feasibility study. Pelangio plans to shift its focus to its Obuasi property in Ghana.
Shares in Pelangio were off 7 at $1.45 in late-afternoon trading in Toronto following the news on Aug. 22.
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