bcMetals banks $5m for Red Chris project

Vancouver — In the midst of an aggressive drill campaign at the historic Red Chris copper-gold project in northwestern British Columbia, bcMetals (C-V) has added $5.25 million to its coffers through a bought deal with Haywood Securities.

The private placement comprises 3.5 million units priced at $1.50 each. A unit consists of one share and half a warrant. A full warrant entitles the holder to buy an additional share at a price of $2.50 for three years. Haywood has the right to acquire 350,000 shares at $1.50 per share for six months from closing.

Earlier this year, the junior picked up Teck Cominco‘s (TEK-T) 10% working interest, and a 10% carried interest, in the property, as well as back-in rights to 43.75% of bcMetals’ 80% interest. The price tag is $300,000 and 250,000 warrants at closing. The warrants are exercisable at 60 until the end of 2006. In addition, bcMetals must issue a total of 1.5 million shares with 1.25 million warrants in 2004.

The warrants have an exercise price at a 20% premium to the market price at the time of issuance in the first year, a 40% premium in the second year, and a 50% premium in the third. BcMetals must also pay the major $1 million within one year of starting commercial production.

At the end of the day, the company will own all of the project, subject to American Bullion Minerals’ 30% reversionary interest, which becomes effective after bcMetals has recovered all of its costs from production. American Bullion can acquire its pro rata portion of the Teck interest by paying 30% of the total. A $3.6-million drilling program is under way, with the junior putting down 41 infill holes at the East and Main zone resources (measured resource: 11.8 million tonnes grading 0.85% copper and 0.77 gram gold, based on a 0.5% copper cutoff). The area has an indicated resource of 37.5 million tonnes grading 0.69% copper and 0.57 gram gold, plus an inferred resource of 28.2 million tonnes grading 0.61% copper and 0.5 gram gold.

Now-de-listed American Bullion worked the property in the 1990s using a total resource of 550 million tonnes grading 0.32% copper and 0.25 gram gold, based on 244 drill holes and a cutoff grade of 0.2% copper. Owing to low metal prices, the company decided to consider mining the higher-grade core, which is estimated to contain 210 million tonnes grading 0.46% copper and 0.38 gram gold. Daily throughput is projected at 30,000 tonnes over a 20-year mine life.