Minera plans to raise $6 million for Latin projects

The company recently signed a private placement agreement, which will see it issue 4.8 million shares at $1.25 per share to Westlake Industries (VSE), Rayrock’s current joint venture partner at Bellavista.

As a result of the planned private placement, Westlake will end up with a 31% stake in Minera, on a fully diluted basis. Rayrock Yellowknife Resources (TSE) — Minera’s current parent company — will maintain a 57% interest.

Conditions of the transaction call for Rayrock Yellowknife to convert $6 million of its outstanding indebtedness into 4.8 million common shares. The balance of the debt will be converted into an 8% retractable note worth $2.4 million. The note is convertible, for a period of five years, into common shares of Minera at $1.25 per share. Since October, 1987, Rayrock has advanced $8.4 million to Minera to fund its exploration programs in Latin America.

Terms of the proposed agreement are still subject to regulatory and shareholder approvals. A special meeting is scheduled for Dec. 20 to obtain shareholder approval.

Minera also said it is withdrawing an earlier preliminary prospectus for a public offering of its shares. A spokesman for the company said there was insufficient investor interest to launch a public offering. Following the private placement with Westlake, there will be 14.8 million shares of Minera issued and outstanding on a fully diluted basis.

Bruce Burton, Minera’s chief financial officer, said the private placement was “an ideal means of cleaning up Minera’s balance sheet, while replenishing the company’s treasury.”

Westlake President Lindsay Semple, who has been appointed to Minera’s board of directors, said the deal gives his company “increased exposure to the Bellavista project as well as the opportunity to participate in Minera’s other Latin American interests.”

Westlake holds a 40% working interest in the Bellavista project where gold reserves were estimated at 14.2 million tons grading 0.05 oz per ton. In July, a new extension to the deposit was indicated by drilling in an area some 300 metres north of the main zone. Bulk sampling is in progress on the property to confirm grades. Additional drilling is planned for late 1989.

In Chile, Minera previously announced reserves at the Ivan property of 3.8 million tons grading 2.9% copper. In March, a new discovery with the potential to increase reserves was made on the property. The results of additional drilling are being compiled as part of a prefeasibility study. A final feasibility report is expected next April, Minera said.

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