New partner for Sikaman in West Africa gold venture

Within months of a production decision for a gold mining property in Ghana, West Africa, a change in the membership of the project’s joint venture partnership has occurred.

Remaining as a major shareholder (40.5% interest) in Canadian Bogosu Resources, the corporate entity set up to develop the Bogosu concession in the Gold Coast nation, is Sikaman Gold Resources (TSE), a Toronto-based junior- mining firm. Its new partner, also with a 40.5% interest, is Billiton B.V. of The Netherlands, a wholly-owned subsidiary of Royal Dutch/Shell.

Billiton’s ownership comprises the former interests of Denison Mines (TSE) and Exall Resources (TSE), which had 27% and 13.5% interests, respectively.

Sikaman paid $6.34 million to acquire the two interests, with Denison receiving $4.44 million and Exall (a Denison affiliate), $1.9 million. Sikaman agreed to convey the two interests to the Dutch company; Billiton-Royal Dutch/Shell agreed to help fund the purchase.

Under their agreement, Billiton will provide Sikaman with $4.43 million, of which $2.6 million is a loan secured by a convertible debenture bearing interest of 5% per year (with the first principal payment due Oct 1, 1989), and of which $1.83 million, representing the balance, is in consideration of the transaction.

Holders of the remaining 19% of the Ghana project are the government of Ghana, with a 10% interest, and International Finance Corp. of Washington, D.C., the investment arm of the World Bank, 9%. June decision

Sikaman President A. T. Griffis reports a production decision for the Ghana project is expected by the end of June.

International Finance, he says, has agreed to arrange the debt financing on a non-recourse basis to bring the project into production. Subject to completion of the feasibility study, current known mineable reserves should support initial production of 75,000 oz gold per year, Griffis says.

Billiton, an international base and precious metals company, has a 30-day option (until about mid- April) to conclude the deal, according to a Billiton spokesman.

The Dutch company has a 30% interest in an Australian gold mine which produces 120,000 oz annually, the spokesman said, and a 40% interest in a gold project in Chile which is on line to start operations in mid-1989 and which will produce an estimated 75,000 oz per year.

Combining Billiton’s share of the above projects with its share of the Ghana operation will give Billiton an estimated annual gold production of almost 100,000 oz beginning the middle of 1989, the spokesman said.