Consolidated Nevada buys Nixon Fork

In buying all the issued and outstanding shares of Nixon Fork Mining, Toronto-listed Consolidated Nevada Goldfields has acquired 71% of the Nixon Fork gold project in central Alaska.

As consideration for the purchase, Consolidated Nevada will issue the Nixon Fork joint venture (owners of Nixon Fork Mining), 10.4 million shares valued at US62 cents each. The owners will also retain a 3% net smelter return royalty on production in excess of 200,000 oz.

Consolidated Nevada has an option to buy the remaining 29% of the project for US$500,000 in cash plus US$500,000 from production.

Proven and probable minable reserves were recently estimated at 106,000 tons grading 1.43 oz. gold per ton. The same report estimated that an underground mine supplying a 150-ton-per-day gravity and flotation mill would produce about 40,000 oz. gold per year at less than US$130 per oz.

Consolidated Nevada plans to conduct development drilling in the area of known reserves, as well as exploration drilling to test for further high-grade skarn mineralization. Results will be incorporated into a feasibility study before January, 1994.

In conjunction with the purchase, Gwalia Consolidated and the Nixon Fork joint venture agreed to acquire, by private placement, US$5.5 million and US$2.5 million, respectively, in Nevada Goldfields common stock. Price: US62 cents per share.

Gwalia, the major shareholder, will proceed with a previously announced sale of up to US$3 million in Consolidated Nevada Goldfields common stock at US62 cents each to third parties in Europe.

Gwalia has also agreed to convert a US$1-million debenture into common stock at US$1.20 per share, US$400,000 in payables at US62 cents per share, and 545,455 preferred shares into common stock on a one-for-one basis. By July 16, when all the transactions will be completed, Gwalia will hold 10.9 million shares (or about 36% of the company’s issued stock) and the Nixon Fork joint venture will hold about 14.5 million shares (about 39% of the common stock).

Consolidated Nevada will also borrow US$5 million from Citibank Australia. The loan, when combined with the private placement, will allow the company to repay US$9 million owed to Mase Westpac Australia.