Rayrock buys shares, warrants to make Brazilian investment

Toronto-listed Rayrock Yellowknife Resources has, by way of a private placement, made a $1-million investment in Brazilian Resources (CDN).

Rayrock will receive shares, warrants and, subject to shareholder approval, a seat on Brazilian’s board of directors.

In addition, Rayrock and Brazilian have agreed to enter a joint-venture farm-in agreement on the latter’s 50,000-acre Cedro Bom I and II concessions in Brazil’s Mato Grosso state. To earn a half interest, Rayrock must, within three years, match Brazilian’s expenditures on the property, which total US$6 million to date.

Rayrock’s investment is part of a $3-million private placement being offered by Brazilian. The placement consists of 6.6 million units at 45 cents per unit. Each unit consists of one share and half a common share purchase warrant. Each full warrant entitles the holder to an additional common share priced at 50 cents for three years from the date of issue.

Proceeds will contribute to the final payment for the acquisition of Brazilian’s 50%-owned Sabara gold property and to fund an updated and expanded feasibility study there. The funds will also be used to complete a second phase of drilling on the Cedro Bom properties and to acquire other gold and diamond properties.

In autumn 1995, Brazilian completed the first phase of drilling at Sabara. The 10-hole program spanned 1,000 metres and resulted in the expansion of the mineral inventory to 600,000 oz. It also confirmed the continuity of the mineralization and structure that host Zone A. Previous drilling at Zone A returned results averaging 1.92 grams gold per tonne over 68 metres, 2.86 grams over 9.3 metres and 1.85 grams over 27.6 metres in three separate holes.

The updated study, expected to begin early this month, will include additional drilling on Zone A, initial drilling on a 4-km-long shear zone known as Zone 10, and examination of other targets.