Cambiex will pay US$23 million in four stages over six years to BHP Diamonds, a wholly owned subsidiary of Broken Hill. The four stages are: US$5 million upon closing; US$5 million one year after closing; US$5 million two years after closing; and US$8 million upon commercial production or six years after closing, which ever is sooner. BHP, at its option, may choose to take the above payments in cash, Cambiex shares, or a blend of 50% Cambior shares and 50% Cambiex shares.
As well, Cambiex will issue BHP 6 million non-transferable warrants that will allow the major to buy Cambiex shares at a price ranging from $1.70 to $7.20 per share.
Cambiex will also reimburse BHP up to $1 million for consumables situated at the Hope Bay properties.
The deal is subject to a 90-day due-diligence review by Cambiex.
The 1,200-sq-km Hope Bay properties cover an entire 80-km-long greenstone belt in an area 750 km northeast of Yellowknife, N.W.T.
BHP has carried out extensive exploration work on the Hope Bay properties since 1991, including diamond drilling, overburden drilling, underground tunneling and bulk sampling, airborne and ground geophysics, as well as mining, metallurgical, environmental and scoping studies.
Inferred resources at Hope Bay consist of: 5.7 million tonnes grading 13.1 grams gold per tonne (2.4 million contained ounces) at the Boston deposit; 2.1 million tonnes of 17.8 grams gold (1.2 million oz.) in the Doris Lake deposit; and 5 million tonnes of 4.3 grams gold (690,000 oz.) in the Madrid deposit.
Cambiex says it intends to continue exploration at Hope Bay with a view to confirming and extending the known resources and eventually carrying out a feasibility study.
In other news, Cambiex closed an offering of 950 units priced at $1,000 apiece. Each unit consists of 2,486 flow-through shares priced at 36 cents per share, and 292 common shares at the same price.
The proceeds will fund work on the Payne and Duquet gold properties in northernmost Quebec, where Cambiex can earn a one-third interest from equal partners
In January, Cambiex assigned its 15% indirect interest in the Yaou and Dorlin properties in French Guiana to Cambior in return for an option to acquire half of Cambior’s interest in the Montagne Tortue and Maripa properties, also in French Guiana.
In connection with this transaction, Cambiex concluded a special warrant placement for proceeds of $2 million. Net proceeds from the placement will be used to fund exploration at Montagne Tortue and Maripa.
Cambiex has relinquished several properties, including: Abancay and Jarwatuna, both of which are in Peru; Sultana in Idaho; and Lesperance in Quebec. For these four properties, Cambiex recorded a $5.8 million writeoff in 1998.
For the first quarter of 1999, Cambiex posted a loss of $174,700 (or 1 cents per share) on interest income of $26,600, compared with a loss of $42,200 (nil per share) on interest income of $31,000 during the corresponding period in 1998. On March 31, 1999, the company’s cash and short-term investments totalled $2 million.
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