La Teko finances U.S. mining venture

Following a recently announced private placement, La Teko Resources (VSE) is looking forward to an active exploration season on several U.S. gold properties. The private placement sold to Gateway Mining, a private company based in Salt Lake City, Utah, included 705,000 units priced at US$0.71 per unit. The financing will raise up to US$1.8 million for exploration programs at La Teko’s Ryan Lode mine in Alaska and its Margarita mine property in Arizona.

Each unit consists of one share plus a non-transferable share purchase warrant requiring Gateway to buy 350,000 shares at US$0.71 per share on Aug. 1, and 355,000 shares at US$0.71 per share on Aug. 25.

The placement also stipulates, subject to satisfactory confirmation drilling of drill-proven reserves at the Margarita mine property, that Gateway will buy a further US$400,000 in shares on Nov. 1, at the then-current market price (less an allowable discount), including a warrant to purchase a further US$400,000 worth of stock on Jan. 31, 1991.

Eddie Babcock, president of La Teko, noted that Gateway’s interest in the company stems from the prospects for the Margarita property where he was optimistic of an increase in reserves.

La Teko believes that the Margarita property lies in a large fossil hot spring system, hosting what the company describes as approximately 16 silica slabs containing gold mineralization. The preliminary reserve estimate of the central four slabs is 400,000 tons grading 0.07 oz. gold per ton.

Two of the three required permits for a heap leach operation are in place and the company expects to complete permitting within four months. Initial production is estimated at 1,000 oz. per month. The estimated capital cost to bring the mine to cash flow is US$1.1 million, which the company should have no trouble meeting.

Prior to the private placement, La Teko’s latest annual report lists the company’s working capital at about $1.5 million as at December 31. The private placements will add an additional US$1.8 million to the company’s books.

In addition to developing the Margarita, La Teko will concentrate on mining at the Ryan Lode heap leach gold mine, eight miles west of Fairbanks.

The mine is an open pit operation on a shear zone about 40 ft. wide and dipping at about 60 degrees . Reserves currently sit at about one million tons grading 0.10 oz., good for about five years at current mining rates with an average stripping ratio of 8-to-1 to a depth of about 200 ft.

La Teko believes the crushing and agglomeration problems which had plagued the seasonal heap leach operation in the past have been solved.

Babcock is excited over the prospects for finding additional ore zones at the Ryan Lode where trenching in 1989 encountered what he said may be another shear zone parallel to the one currently being mined. He also noted the presence of intrusives in the area leads the company to speculate that the property has the potential to host a larger orebody at depth.

Plans for the property this season include further trenching, VLF surveys and shallow drilling to prove up additional heap leach ore and to establish deep drilling targets.

Precious metal production in 1989 totalled 7,500 oz. of gold and 4,900 oz. of silver produced from 155,000 tons of agglomerated material.

Although La Teko reported a loss of $281,000 for the year ended Dec. 31, cash flow from operations after changes in non-cash working capital items was $452,000. Prior to the private placements, the company had about 9.2 million shares outstanding.