Int’l Minerals closes $92-million for Rio Blanco

Vancouver – Closure of its $92-million public offering has International Minerals (IMZ-T, IMZLF-O) with funds in hand to advance construction and development of its Rio Blanco gold-silver project in Ecuador.

A total of 9.5 million units of International Minerals (IMC) were sold at $5.50 apiece for gross proceeds of $52.25 million. Units were comprised of a share plus one-half a transferable warrant, with each full warrant exercisable at $6.88 for two years. The underwriters (TD Securities, Dundee Securities, GMP Securities and Wellington West Capital Markets) hold an overallotment option to purchase an additional 950,000 units at the same price.

In addition to the equity offering, IMC also sold $40-million aggregate principal amount of debentures bearing a 5.5% coupon rate for six years and convertible into IMC shares at the holder’s option at $6.88 per share. The debentures were listed for trading along with the transferable warrants.

The lion’s share of the $87.8 net proceeds will be earmarked for moving a portion of Rio Blanco into production. A recently completed feasibility study on the epithermal gold-silver project, located in southwestern Ecuador’s Azuay province, reviewed proven and probable reserves of 2 million tonnes grading 8.1 grams gold per tonne (521,000 contained oz.) and 63 grams silver per tonne (4 million contained oz.) in the Alejandra North Vein deposit.

An 800-tonne-per-day underground mining operation is planned on the deposit over a projected 7-year mine life with average annual output of 66,000 oz. of gold and 410,000 oz. of silver. Initial capital expenditures for the mine are projected at US$60.3 million with an estimated 20.1% internal rate of return (pre-tax and pre-royalty) based on US$475 per oz. gold and US$8.00 per oz. silver. A 3.4-year payback period is expected.

Outside of the Alejandra North Vein deposit, IMC’s Rio Blanco project hosts a number of other mineralized zones. The high-grade San Luis Veins deposit, immediately north and adjacent to the Alejandra North Vein, hosts an inferred resource estimate of 125,000 tonnes grading 35 grams gold and 152 grams silver. A recent drill program was aimed at confirming and upgrading the resource for potential inclusion into the Alejandra North mining plan. Initial development of the high-grade deposit could accelerate the project’s capital payback period.

In addition to Rio Blanco, IMC holds its Gaby gold porphyry project in southern Ecuador and has recently commenced a feasibility study on its potential development. At least 20,000 metres of core drilling is planned to confirm and upgrade historic results.

The main Gaby deposit hosts a 1997 proven and probable resource estimate (non-NI43-101 compliant) of 60.4 million tonnes at 0.79 gram gold plus 103.5 million tonnes of 0.72 gram gold for total contained gold of 3.9 million oz. On the near-by Papa Grande-Mollopongo deposits, an indicated and inferred resource of 46 million tonnes at 1.1 grams gold was also tabled in 1997.

Earlier this year, IMC also optioned two low-sulphidation epithermal silver-gold projects in southern Peru, Antabamba and Pallancata East, from Barrick Gold (ABX-T, ABX-N).

The company posts a $465-million market capitalization based on its 91 million shares outstanding and recent $5.10 trading level. IMC’s shares have a 52-week trading range of $3.39-to-$6.50.