Financing falls through despite boost in reserves

A financing package arranged by Central Crude (TSE) for the Moss Lake and Eagle River gold projects has fallen through, even as recent calculations show an increase in reserves at Eagle River.

Citing poor market conditions, a listless gold price, and concerns about share dilution, President Richard Nemis said the company has been unable to raise the $7.7 million in exploration financing through two private placements announced last December (T.N.M., Dec 17/90).

The original package consisted of one private placement of 300,000 flow-through units at $4.50 per unit and a second placement of 400,000 common share units at $4 per unit. Proceeds generated by the placements were earmarked for accelerated exploration at the Moss Lake project west of Thunder Bay, Ont., and continued exploration at the Eagle River property near Mishibishu Lake, Ont.

Nemis said the company will now turn to one of two alternate financing arrangements to ensure that a $2-million, 2-month exploration program for the Moss Lake project, in which Central Crude is earning a 60% interest, goes ahead as scheduled.

“I will raise the money even if I have to do a straight prospectus-type financing,” he said.

Reserves on the Moss Lake property, held by Tandem Resources (TSE) and Storimin Exploration (ASE), were recently upgraded to 65 million tons grading 0.032 oz. per ton.

At the Eagle River project, independent consultants Watts, Griffis and McOuat have recently announced proven and probable reserves of 2.24 million tons grading 0.25 oz. gold, cut and fully diluted (30%). In addition, the preliminary report says, the property contains possible reserves of 620,000 tons grading 0.24 oz.

Uncut reserves include 1.76 million tons grading 0.48 oz. in the proven and probable category and 476,000 tons grading 0.49 oz. in the possible category.

The reserve estimations are based on diamond drilling and underground work completed to date on the No.8, No.6, and No.2 zones. To calculate the cut figures, the consultants reduced the average uncut grades to 65%, based on the results of the 60,000-ton bulk sample completed at Hemlo Gold Mines’ (TSE) Golden Giant mill last year.

Eagle River is a joint venture between Hemlo Gold (60%) and Central Crude (40%). The results of a final feasibility study on the project are expected by month-end.