Viceroy misses Bounty payments

Vancouver — Last year was another tough one for mid-tier gold producer Viceroy Resources (VOY-T), which reported a loss of $45 million, or 78 per share, on sales of $114.2 million for the year.

Driving the loss was a $30.6-million writedown on the company’s Brewery Creek mine in the Yukon and other exploration properties.

As of Dec. 31, 2000, Viceroy had a net working capital deficiency of $6.2 million, arising from its due debt on the Bounty mine in Western Australia and its reclamation liability on the Castle Mountain mine in Nevada. As a result of the shortfall, the company is out of compliance on hedge contracts. Viceroy says it is still delivering on the contracts and is negotiating to secure waivers.

So far this year, the company has missed a total of A$9.5 million in debt payments for its acquisition of the Bounty mine. Under the loan agreement, the unpaid principal payments allow NM Rothchild and Sons to demand immediate and full payment of the debt. Viceroy is negotiating to a restructure the debt and is also trying to raise equity through private placements and asset sales to third parties.

Last week, Calgary-based Propriety Industries (PPI-T) reached a preliminary agreement that would see the diversified company take a 49% stake in Viceroy Resource.

Under the terms of the deal, Propriety would subscribe for 28 million units of Viceroy at a price of 30 each. One unit would hold one share and one warrant. For every two warrants, the holder could acquire one share at 35 for two years. The deal would put $8.4 million into Viceroy’s coffers.

Propriety owns and manages a portfolio of financial, natural resource and real estate assets. Once the deal closes and all the warrants are exercised, Propriety would hold a 49% equity interest in Viceroy.

Viceroy acquired the Bounty gold mine in 1999 from LionOre Mining International (LIM-T) for US$24.6 million in cash and shares. At the end of 1998, Bounty was host to proven and probable reserves of 2 million tonnes grading 5.17 grams, equivalent to 331,000 oz. The total resource stood at 8.8 million tonnes grading 3.92 grams, equivalent to 1.1 million contained oz.

Bounty is an underground operation supplemented by smaller, lower-grade open-pit deposits, with a carbon-in-leach plant capable of processing 750,000 tonnes per year.

In 2000, the gold miner cranked out 263,000 oz. from mines in Australia and North America.