Canacord seeks buyer for Silbak interest

Canacord Resources (TSE) is trying to sell its 9.9% interest in the Premier Silbak gold property but hasn’t ruled out the possibility of putting up its share of the financing to put the property into production. President John Ivany says he favors selling the interest. The British Columbia property, operated by Westmin Resources (TSE) with a 50.1% interest, is expected to cost $80 million to put into production. That would require Canacord to put up $8 million.

Ivany said the company has most but not all the money needed to meet the next cash call for construction of the mine, due July 1, of $700,000. However, he said Prime Capital, which has a 20% interest in Canacord, would make up the difference in order that Canacord can meet its requirements. The company has already contributed $600,000 to the project’s capital costs.

The Silbak property is expected to be in production in 1989 when it will produce about 77,000 oz of gold and 890,000 oz of silver annually. A 2.5-3 year payback of capital costs is expected and a 10 year mine life is predicted. The potential for further reserves, however, is very good says Ivany.

If the company decides to fund its interest in the project through debt financing, it would have to pay one or two per cent above the prime interest rate and none of the proposals by three banks would let Canacord’s debt stand alone. It would have to be backed by Prime and that backing would cost Canacord a premium.

Apart from the difficulties of raising the money to fund its interest in the project, Ivany says the company’s small interest puts it at the mercy of the operator and gives it very little input into the operation.

Earlier this year Canacord came close to selling its interest in the project to Pioneer Metals (TSE) which currently has a 40% interest. However, that deal fell through.