Queenstake raises Jerritt funds

Queenstake Resources (QRL-T) has closed its previously announced brokered private placement of 105 million subscription receipts for proceeds of $21 million.

Each receipt allows the holder to buy one share and half a share purchase warrant once Queenstake completes its acquisition. A whole warrant allows the hold to buy one share at 25 for two years.

The proceeds will go toward the acquisition of the Jerritt Canyon gold mine in Nevada’s Elko Cty.

Queenstake can acquire the mine from AngloGold (AU-N) and Meridian Gold (MNG-T) by issuing 32 million shares and paying US$1.25 million in cash, plus a non-refundable US$250,000. Another US$6 million is due in quarterly $1-million instalments between June 2005 and September 2006, or earlier if project debt is paid off ahead of time. The two vendors retain a royalty capped at US$4 million.

AngloGold, which owns 70% of Jerritt and operates the mine, and Meridian, which has the remaining 30%, will share the proceeds and the net smelter return royalty pro rata.

In the end, AngloGold would hold about 10% of Queenstake’s issued and outstanding shares; Meridian would have about 4%.

While Queenstake has received regulatory approval for the financing and acquisition, the trio have extended the deal’s closing by about a week to around July 1.

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