Situated 360 km east of Perth in the Forrestania-Southern Cross Archean-aged greenstone belt, the Bounty is a combined underground/open-pit mine equipped with a 750,000-tonne-per-year carbon-in-leach plant. Annual production, mostly from underground, is projected to be 120,000 oz. at a cash operating cost of US$220 per oz.
A newly developed extension of the original deposit, which is believed to contain a resource of about 400,000 oz., remains open at depth and along strike to the south. Gold mineralization occurs in a steeply dipping banded iron formation with widths varying from 5 to 25 metres.
Reserves, calculated on a fully diluted basis, weigh in at 1.9 million tonnes grading 5.3 grams gold per tonne, equivalent to 324,000 oz. These are contained in a mineral resource of about 3.4 million tonnes grading 6.5 grams gold, or 715,000 contained ounces. Production is expected to continue at least until 2004.
From the time of its first gold pour, in 1989, until June of this year, the Bounty mine has produced 1 million oz. gold from 6.7 million tonnes of ore grading 5.2 grams gold per tonne.
The acquisition of the mine raises Viceroy’s production profile and adds about 800,000 oz. gold to the company’s reserve and resource categories.
Forrestania Gold transferred its 100% interest in Bounty to Viceroy in return for a cash payment of US$13 million and the issuance of 6.1 million Viceroy preferred shares and 5 million common shares. An additional US$1.3 million will be paid should the mine achieve certain production levels prior to Dec. 31, 2000.
The preferred shares will pay a semi-annual cash dividend at a fixed rate of 4.3% per year. For a period of 18 months, Forrestania has the option of converting the preferred shares into common shares of Viceroy according to a 1-to-2 ratio of common shares to preferred shares. Thereafter, each preferred share can be converted to 2.5 common shares. Viceroy retains the right to convert the preferred shares at any time after 12 months and up to 18 months should its stock price average $2.20 over that period. From 18 to 36 months, the company may elect to convert the preferred shares if the trading price averages $2.75. Viceroy can also redeem the preferred shares at any time by paying $1 per preferred share.
The Vancouver-based company can also acquire, over one year, additional mining leases for US$4.2 million to US$6.8 million (the cash portion of the option increases on a quarterly basis) plus 1.6 million common shares.
In addition to the mine transfer, Forrestania and Viceroy will form a 90-10 joint venture aimed at exploring for and developing nickel prospects on the 1,000-sq.-km property. Forrestania will manage the program.
Be the first to comment on "Viceroy closes deal Down Under"