Glamis ups debenture issue to raise US$4 million more

The successful completion of a private placement of debentures by Glamis Gold (TSE) prompted the company to increase the size of the issue to US$12 million from a minimum of US$8 million.

The placement — completed by Loewen, Ondaatje, McCutcheon — is in the form of warrants exchangeable for convertible debentures. The warrants can be exchanged following the issuance by the company of a prospectus and clearance from the various regulatory bodies in each Canadian province.

The 5-year debentures are convertible into Glamis common stock at a price of $3.35 and carry an interest rate of 8%. The debentures are unsecured and can be redeemed at par after two years if the price of the common stock exceeds $4.52 per share. After three years the debentures can be redeemed if the price of the stock is over $4.19.

The company plans to use the funds to add to working capital. In addition to the debenture placement, the company is reviewing proposals from several banks for new credit lines.

Glamis plans to use the two capital sources for property acquisitions as well as to provide funds to place new and existing properties into production.

As at March 31, 1991, prior to the debenture placement, the company reported a working capital position of $2.7 million and long-term debt of $11.5 million.

Glamis is continuing to expand its gold production base. The company produced 17,353 oz. during the third quarter ended March 31, for a total production of 40,371 oz. during the first nine months of the fiscal year.

A target production of 60,000 oz. is expected to be met for the year with fiscal 1993 production targeted at 100,000 oz.

This compares with production of 9,010 oz. in the third quarter of 1990 and 31,310 oz. for the 9-month period.

Cash cost per oz. for the first nine months of the year was US$173. while revenue per oz. for the third quarter was US$424.

The company reported earnings of $1.5 million for the recent third quarter and $3.4 million for the nine months. Cash flow for the third quarter was $2.2 million and $6.7 million for the nine months.