Aurizon keeps pushing towards production

The closing of Aurizon Mines‘s (ARZ-T, AZK-X) $28 million financing on Dec. 2 clears the way for the company’s shares to start riding the market’s recent gold wave.

Patrick Soares, manager of investor relations at Vancouver-based Aurizon, says the company’s shares missed the benefits of the surge in the spot-gold price in late November as the market waited for the completion of its financing.

“The market recognized we were going to do a financing,” Soares says. “So stock prices were not moving until the financing was complete.”

In Toronto on Dec. 2 Aurizon shares are up 2.3% or 3 to $1.34 on roughly 80,000 shares.

The placement consists of the issuance of roughly 21 million common shares at $1.35 apiece. Soares says the omission of warrants from the deal helps ensure that investors in the company are in for the long term, believing in both Aurizon and a robust gold price.

On Dec. 2 the company said in a press release it would put the funds towards construction at its 100%-owned Casa Berardi Project in northwestern Quebec, and for general corporate purposes.

In addition to $28 million raised from the private placement, Soares says Aurizon is securing debt financing of roughly $75 million; it should be in place by the new year.

With a cost of $79 million to bring the mine into production by November of 2006, the extra $24 million in the vault will be used — at the bank’s request — as a contingency fund to deal with any unforeseen obstacles.

The press release also updated progress at Casa Berardi. With headframe, shafthouse and hoistroom completed, a shaft sunk to 190 metres, Zone 113 ramp reaching down to 670 metres, and the Lower Inter ramp at a vertical depth of 560 metres — underground development is moving along according to plan.

When production begins in November, the mine will average 175,000 oz. gold per year for the initial six years at a cash cost of roughly US$219 per oz.

Reserves for the mine currently stand at 4.9 million tonnes averaging 7.7 grams gold. Measured and indicated resources stand at 2.7 million tonnes with an average of 5.1 grams gold and inferred resources stand at 5.6 million tonnes with and average of 6.5 grams gold.

Soares says Aurizon is in good position when it comes to attracting labour — which can be difficult in the region. He says a combination of miners wanting to return to Canada from abroad, and a labour pool within the nearby town of La Sarre, has provided, and will continue to provide, the company with experienced labour.

“We’re attracting the top of the top (workers),” Soares says. “In part it’s because of the location . . . and in part it’s national pride. We’re getting workers that want to make a successful mine in Canada and specifically in Quebec.”

In conjunction with construction of the mine, Aurizon is pushing ahead with exploration and infill drilling to expand its resource and reserve base.

Aurizon has recently signed a joint-venture agreement with Explorer Alliance, to surface drill on property bordering Casa Berardi. In addition, the company has three underground drills in operation, and Soares says in the coming year the company plans to spend between $4 to $5 million to complete roughly 20,000 metres of exploration drilling.