GlobeStar eyes $5 million for Cerro de Maimon

GlobeStar Mining (GMI-V) has inked a private placement deal with Canaccord Capital and Dundee Securities to raise $5 million to advance the Cerro de Maimon copper-gold project in the Dominican Republic.

Under the deal, Globestar will sell just fewer than 6.7 million units at 75 apiece, with each unit comprising one share and a share purchase warrant. One warrant is good for one share at $1.30 for 18 months from closing.

Canaccord and Dundee stand to receive a commission equivalent to 7% of the gross proceeds generated by the offering. The pair will also be granted 18-month options for up to 10% of the units sold. An over-allotment option will also allow the agents to buy up to an additional 666,666 units any time prior to closing.

All securities issued under the transaction will be subject to a four-month hold period. The deal is subject to due diligence and regulatory approvals; closing is expected by Nov. 18.

Globestar says that Pincock, Allen and Holt will soon complete a bankable feasibility study of the project.

At last report, measured and indicated sulphide resources stood at 4.7 million tonnes grading 2.8% copper and 1.74% zinc, plus 35 grams silver and 0.96 gram gold per tonne. Similarly categorized material in the oxide cap stands at 664,000 tonnes averaging 63.8 grams silver and 2.54 grams gold.

Ultimately, plans at Cerro de Maimon call for commissioning of an open-pit mine and mill by late 2004. The company also intends to explore some 50 km strike length on the surrounding Maimon formation.

Globestar has a half-interest in the project; a private, arm’s-length U.S.-based Company holds the other half, subject to a 10% management fee to Globestar and a provision of $750,000 for project development. The original owner, Falcondo, an 85%-owned subsidiary of Falconbridge (FL-T), retains a 2% net smelter return royalty.