A financial restructuring at
Geomaque reached an agreement with Resource Capital Fund II, to whom it owed US$2.9 million, to restructure its debt with interest effectively paid out of cash flow from Vueltas del Rio. The principal of Resource Capital’s loan is being repaid in seven quarterly instalments starting at the end of September 2002.
Resource Capital and two other institutional investors are supplying US$1.3 million in cash by subscribing for a 39.7-million-share private placement. Shareholder approval is needed to issue 31.3 million of those shares, so an extraordinary meeting is being called in February. Except for an immediate payment of US$266,000, the cash remains in escrow until shareholders approve the new issue.
After the share issue, Geomaque will have about 115 million shares outstanding. Resource Capital will own about 20 million, and institutions and two major creditors will be large shareholders.
Resource Capital also receives 40% of net cash flow from Vueltas until it has recovered a net 40% internal rate of return on its US$2.9 million in advances to Geomaque. After that, it retains a 10% net cash flow royalty.
A US$1.7-million debt to the contract miner at Vueltas, Sococo de Costa Rica, is being paid off over 10 quarterly instalments starting at the same time as payments begin to Resource Capital. Sococo, equipment distributor Butler Machinery, and investment house Haywood Securities all accepted shares as payment of debt in October, and will be large shareholders in the restructured company.
Vueltas, which poured its first gold in March of this year, has not met its initial cost and production goals. Over the third quarter, its first three months of commercial production, it produced just over 10,000 oz. at a cash cost of US$251 per oz. Feasibility projections for Vueltas had it producing 60,000 oz. annually at costs below US$200.
Coincident with the restructuring, a new board of directors is taking over at Geomaque. Mining executive John Hick has become the new president and chief executive.
Vancouver — The Canadian exploration division of De Beers, now a subsidiary of
So far, 29 diamonds weighing 0.54 carat have been recovered following the partial processing of a 100-tonne bulk sample. The largest stone from the bulk sample weighed 0.07 carat.
“The presence of commercial size diamonds at Cristal is an important advancement and achieves the goal that was set for this first bulk sample,” says Al Shefsky, Pele Mountain’s chief executive officer.
The bulk sample was taken last September from an outcrop of diamond-bearing, pyroclastic ultramafic breccia near the centre of the showing. The breccia facies makes up the base of the unit, and the pyroclastics represent the top, with ash tuffs increasing in proportion toward the upper contact. The showing is at least 200 metres wide.
Surface sampling of all facies of the Cristal prospect indicates that the unit is diamondiferous. Fifteen samples weighing a total of 171.3 kg yielded 327 microdiamonds from all size fractions up to and including 0.6 mm square mesh (a micro is here defined as at least 0.5 mm in at least one dimension). At least 10 stones exceed 0.5 mm in one dimension. The best results have come from samples taken near the contact between the pyroclastics and more brecciated material. Three samples, weighing a combined 39.4 kg, returned 159 micros. The 100-tonne bulk test sample was collected in the immediate area of these samples, from a 10-by-10-metre section.
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