Trillion restructures debt on Ndarama

Kanata, Ont.-based Trillion Resources (TLG-T) has restructured its debt load regarding the purchase of the Ndarama gold mine in Zimbabwe.

Trillion has entered into an agreement-in-principle for a US$6.6-million secured convertible debenture that matures on Dec. 31, 2000. Annual interest of 8% is payable quarterly.

The debenture is convertible into Trillion shares at US$1 each for the duration of the term and is fully redeemable (with a 30-day notice period).

In addition, Broadway Holdings is to be granted 660,000 share-purchase warrants exercisable for two years at US$1 per share.

The junior acquired a 20% stake in the project in November 1996 and proceeded to exercise an option to earn the remaining interest. It has served as operator since mid-September 1997.

In late June of this year, Trillion made a cash payment of US$700,000 and agreed to make additional payments totalling US$1 million over the next two months. The balance of the US$6.6 million will be paid over the next 30 months by means of a secured convertible debenture.

Based on an independent resource estimate, Ndarama contains 7.5 million tonnes grading 2.1 grams per tonne. More recently, in 1997, Trillion conducted an intensive due diligence program, including 25,000 metres of core and reverse-circulation drilling. The results of that work point to a resource, in all categories, of 13.5 million tonnes grading 3.2 grams gold.

A recent Trillion release pegs the overall reserve and resource base at Ndarama at 1.4 million oz. gold.

At last report, Ndarama was operating as a small, successful mine, producing about 15,000 oz. gold per year.

Expansion plans call for the installation of a new crushing plant and an increase in production to 30,000 oz. per year. Ultimately, Trillion intends to boost annual production to 80,000 oz. gold. However, the company points out that the second phase of expansion “has been put on hold pending improvement in capital markets, as any major equity financing at this time would result in excessive dilution to our shareholders.”

The Ndarama mine property hosts a variety of ore types in close juxtaposition:

n a disseminated, pyritic ore in a sericitized felsic intrusive body, characterized by laterally extensive zones of low-grade mineralization; n narrow stibnite-arsenopyrite and variably iron sulphide-rich quartz veins in shallow-dipping reverse faults; and

n a sulphidized, banded or brecciated chert-magnetite iron formation.

Trillion has US$1.4 million in cash and US$850,000 in marketable securities.

The company expects to receive an additional US$300,000 in cash and US$1 million in securities upon the closing of the sale of the Segala project in Mali, which is being purchased by Nevsun Resources.