Vancouver —
“Los Filos and El Limon will be another step forward in the growth of Wheaton River as a dynamic global gold producer,” says the company’s CEO Ian Telfer. “We are confident we can bring Los Filos into production by 2006, which should increase our projected annual production to over 700,000 ounces at cash costs of less than US$140 per ounce.”
The first agreement has Wheaton taking over Miranda for US$38.62 million. The all-cash deal pegs the value of Miranda shares at 74 — a 49% premium over its 50 per share trading price before the deal was announced. Miranda’s largest shareholders, who hold 61.5% of the 71.9 million fully diluted shares, have agreed to tender their stock.
“After completing a thorough review of all options available to maximize value to Miranda shareholders, we are pleased to have reached an agreement with Wheaton River,” says Miranda President Enrique Miranda Paz, pointing out that the Wheaton River offer represents a 136% premium to the volume-weighted average trading price of Miranda shares over the last 20 business days.
Miranda Mining was formed in November 2001, when Miranda Mining & Development, a private Mexican company, amalgamated with Malaspina Capital. The company’s main assets are the small Nukay gold operation and a 30% carried interest in Minera Nuteck, the company that holds the Los Filos deposit. At last count, the project hosts a measured and indicated resource of 38.4 million tonnes grading 1.44 grams gold using a 0.5 gram cut-off. The property also has an inferred resource of 11 million tonnes grading 1.35 grams gold.
In connection with the deal, Wheaton will buy Teck’s 70% interest in the Los Filos property. The price tag comes in at US$48.4 million. With Miranda’s 30% interest in the project, Wheaton will wholly own the property.
Miranda put itself on the auction block in May, when, in conjunction with Teck, the partners agreed to sell Nuteck.
“Miranda and Teck Cominco have advanced the Los Filos gold deposit to a stage where it should be developed into an operating mine” says Miranda Paz.
El Limon
The junior also has a 21.2% stake (14% carried) in Minera Media Luna, the company that holds the El Limon depsoit. El Limon lies 15 km north of Los Filos and hosts some 1.5 million oz. of gold from material grading 3.53 grams gold. In 2001, drill crews completed 29 holes at El Limon and, in the process, outlined a section of gold-bearing skarn mineralization covering a 1,000-by-300-metre area. Mineralization is associated with magnetite, pyrrhotite, chalcopyrite and pyrite. The northern part of the zone is near the surface, whereas the southern portion occurs at depths exceeding 100 metres.
Moving to the west, similar skarn and oxide mineralization have been identified near or along the hornfels-marble contact. The best previous values came from hole 37, which yielded 8.44 grams gold over 4.6 metres and 1.6 grams gold over 4.6 metres.
At the 1-sq.-km La Amarilla target, which is interpreted as the northern extension of the El Limon West hornfel-marble contact, a previous drill hole returned 22.8 metres grading 1 gram gold.
Preliminary metallurgical tests on seven composite samples from the 2001 drill program showed that gold can be recovered from the sulphide-rich portions of the mineralization by a simple flow sheet consisting of a grinding circuit followed by cyanide leaching and then a carbon-in-pulp circuit using activated carbon.
Teck, which holds a 78.3% stake in the project, picked up the 260-sq.-km property, 150 km southwest of Mexico City, in 1998, when the Mexican government auctioned-off unclaimed parts of the 500-sq.-km Morelos national mining reserve. Bidding US$3.1 million, Teck considered the area prospective for skarn-style mineralization similar to the nearby Nukay project, which hosts a total resource of 4.4 million tonnes grading 4.47 grams gold in three separate zones.
Last year, Miranda picked up a 30% equity stake in Compania Minera Nukay from Teck Cominco giving the junior 100% of Nukay. The price tag came in at $700,000 payable by issuing 2 million shares and 500,000 warrants. Each warrant is exercisable into one share by July 16, 2004, at any time after the simple average of the closing price of the shares during any 60 consecutive days is $1 or higher per share.
The Nukay mine has been in operation for almost 20 years and hosts several deposits that combined contain 300,000 oz. of gold reserves in material grading 4.17 grams gold and 700,000 oz. of gold resources contained in material grading 3.64 grams gold. The Nukay operation has produced roughly 90,000 ounces of gold over the last five years at an average cash cost of US$164 per oz.
The take-over bid requires at least 90% of the Miranda shares to be tendered. The bid will also be subject to Wheaton River completing the acquisition of Teck Cominco’s interest in Nuteck.
Wheaton currently produces over 500,000 gold-equivalent oz. at a cash cost of about US$100 per oz. and has over 4 million oz. in proven and probable reserves. Comments Telfer: “This acquisition will add significantly to both production and reserves going forward.”
The company aims to have a feasibility study for the Los Filos project in hand by next year. The project would mark the new Wheaton’s first development project. The company previously bought into existing operations.
Last summer, Wheaton River acquired the Mexican company Minas Luismin and then in mid-March, the junior acquired, from
At the same time that it acquired Alumbrera, Wheaton added the Peak gold mine in New South Wales, Australia.
Wheaton River raised the funds needed to complete the Rio Tinto transaction in March by issuing 230 million units priced at $1.45 apiece. A unit consists of a share and one-quarter of a warrant, with a full warrant entitling the holder to buy one share until June 2007 at $1.65 each.
Last month, the company cashed up its till by entering into an $80-million bought-deal financing. Griffiths McBurney & Partners is leading a syndicate of underwriters, including BMO Nesbitt Burns, Canaccord Capital, Orion Securities and Sprott Securities, that has agreed to buy 38.1 million units priced at $2.10 each. The syndicate will have the option of buying up to an additional 9.5 million units in respect to the offering. A unit consists of one share and half a warrant. A whole warrant entitles the holder to buy one share at $3.10 for five years.
In the second quarter ended June 30, Wheaton River tallied net earnings of US$11.1 million, or US3 per share. This marks a 5-fold increase over the second quarter of 2002, when the company earned US$1.8 million, or US2 per share.
Production rang in at 92,600 oz. gold and 1.5 million oz. silver at a total cash cost of US$90 per gold-equivalent oz., net of copper credits. Copper sales for the quarter totalled 28 million lbs.
“Wheaton’s record performance reflects our focused growth strategy and the strong operating results of each of our mines,” says Telfer.
Earnings and cash flows are expected to be further enhanced in the third quarter when the company’s June 24, 2003, acquisition of an additional 12.5% interest in Alumbrera is included for an entire 3-month period.
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