South Atlantic completes financing

Production financing has been finalized for the Oracle Ridge project owned by South Atlantic Ventures (VSE). Total funding for the project is estimated at US$6 million for mill construction plus US$1 million for working capital requirements. The estimate includes US$500,000 already spent by South Atlantic.

The financing includes a US$5 million loan from the French bank, Societe Generale, for a term of five years at an interest rate of U.S. prime plus 2%.

An additional US$750,000 was raised when Continental Catalina Inc. re-negotiated its interest in the property to a 30% net cash flow interest.

The balance of funds has been raised through a private placement by South Atlantic of three million units at 35 cents per unit, each comprised of one share plus one share purchase warrant for proceeds of $1.05 million. Two warrants give the holder the right to purchase a further share at 50 cents per share for 18 months. The placement increases the company’s issued capital to 9.7 million shares.

The Oracle Ridge project, 15 miles northwest of Tucson, Ariz., hosts an underground reserve of four million tons grading 2.33% copper and 0.67 oz. silver per ton.

Previous owners have spent an estimated US$23 million developing the property, including office, warehouse, changehouse and workshop buildings plus full development of the required underground workings.

Mining and milling cost are expected to be quite low, estimated at US$24 per ton before financing costs and taxes. The company estimates the average cash break-even price at US$0.65 per lb. of copper after precious metal credits.

About 60% of the mining will be by mechanized cut-and-fill in ore zones dipping at 30% and ranging in thickness from 30 to 40 ft. The remaining portion of the orebody tends to occur in flat-lying zones, varying in thickness from 18 to 60 ft. and will be mined by room-and- pillar methods.

Savings are also expected in the mill which will use tower regrinding and column flotation. Copper recoveries are expected to be in excess of 91% while silver recoveries are estimated at 75%. The copper concentrate produced will also contain some gold credits estimated at about 2,200 oz. per year, based on a production rate of 285,000 tons per year.

All permitting is in place except the Aquifer Protection Permit, which is expected by the end of the third quarter.

Lutz Klingmann, president of South Atlantic, expects the mine and mill to be up and running by mid-August. He noted the company was in discussion with a number of copper smelters in the south-western U.S. for a concentrate sales contract.