Int’l Minerals tops up treasury to develop Rio Blanco

Vancouver — Closure of its $92-million public offering has International Minerals (IMZ-T, IMZLF-O) with funds in hand to advance construction and development of its Rio Blanco gold-silver project in Ecuador.

A total of 9.5 million units of International Minerals (IMC) were sold at $5.50 apiece for gross proceeds of $52.25 million. Units consisted of a share plus half a transferable warrant, with each full warrant exercisable at $6.88 for two years. The underwriters (TD Securities, Dundee Securities, GMP Securities and Wellington West Capital Markets) hold an overallotment option to purchase an additional 950,000 units at the same price.

IMC also sold debentures worth $40 million bearing a 5.5% coupon rate for six years and convertible into IMC shares at the holder’s option at $6.88 per share. The debentures were listed for trading along with the transferable warrants.

The lion’s share of the $87.8 million will be earmarked for moving a portion of Rio Blanco into production. A recent feasibility study on the epithermal gold-silver project, located in southwestern Ecuador’s Azuay province, reviewed proven and probable reserves of 2 million tonnes grading 8.1 grams gold per tonne (521,000 contained ounces) and 63 grams silver per tonne (4 million contained ounces) in the Alejandra North Vein deposit.

An 800-tonne-per-day underground mining operation is planned on the deposit over a projected 7-year mine life with average annual output of 66,000 oz. gold and 410,000 oz. silver. Initial capital spending is projected at US$60.3 million with an estimated 20.1% internal rate of return (pretax and pre-royalty) based on US$475-per-oz. gold and US$8-per-oz. silver. A 3.4-year payback period is expected.

Outside of the Alejandra North Vein deposit, IMC’s Rio Blanco project hosts a number of other mineralized zones. The high-grade San Luis Veins deposit, immediately north and adjacent to the Alejandra North Vein, hosts an inferred resource estimated at 125,000 tonnes grading 35 grams gold and 152 grams silver. A recent drill program was aimed at confirming and upgrading the resource for potential inclusion in the Alejandra North mining plan. Initial development of the high-grade deposit could accelerate the project’s capital payback period.

In addition to Rio Blanco, IMC holds the Gaby gold porphyry project in southern Ecuador and recently began a feasibility study on its development. At least 20,000 metres of core drilling is planned to confirm and upgrade historic results.

The main Gaby deposit hosts a 1997 proven and probable resource estimate (not compliant with National Instrument 43-101) of 60.4 million tonnes grading 0.79 gram gold plus 103.5 million tonnes at 0.72 gram gold for total contained gold of 3.9 million oz. On the nearby Papa Grande-Mollopongo deposits, an indicated and inferred resource of 46 million tonnes at 1.1 grams gold was tabled in 1997.

In southern Peru, IMC optioned two low-sulphidation epithermal silver-gold projects, Antabamba and Pallancata East, earlier this year from Barrick Gold (ABX-T, ABX-N).

IMC posts a $465-million market capitalization based on its 91 million shares outstanding and recent trading level around $5.10. The shares have traded in a 52-week range of $3.39-$6.50.