Gleichen Gets Teck’s Morelos Gold Project

VANCOUVER — On the heels of closing a $241-million financing, Gleichen Resources (GRL-V) has acquired Teck Resources’ (TCK. B-T, TCK-N) 78.8% stake in the Morelos gold project for US$150 million and a 4.9% Gleichen stake.

The financing, led by Macquarie Capital Markets, BMO Capital Markets and GMP Securities, comprises 241.5 million special warrants that can be exercised for one Gleichen share at $1 and one-quarter of a share purchase warrant. Whole share purchase warrants are exercisable at $1.30 until Nov. 12, 2011.

The Morelos project, which Teck had been advancing through to a feasibility study, is now Gleichen’s chief asset.

A four-hour drive south of Mexico City, Morelos so far has measured and indicated resources of 28 million tonnes grading 3.2 grams gold per tonne. Teck’s prefeasibility study proposed a US$300-million mine that would produce about a quarter million ounces of gold per year.

With the project now in hand, Gleichen plans to complete feasibility level drilling begun by Teck. One area of the 290-sq.-km property, Guajes, is already up to feasibility snuff, while another zone, El Limon, still needs further drilling to reach that mark.

Gleichen says in a corporate update of the project dated Nov. 12, that Morelos is near excellent infrastructure, including paved highways, a 600-megawatt hydropower plant and plenty of water.

Among other tasks in 2010, Gleichen proposes to continue with permitting and infill drilling en route to a mid-2011 feasibility study. At that point it would make a construction decision.

To smooth over community relations, which had at points been strained under Teck’s tenure at Morelos, Gleichen has hired cultural anthropologist Jamila Abassi.

At present, Gleichen has two permitted drill rigs onsite and says it is negotiating access agreements.

Mineralization at Morelos occurs in the contact zone of a granodiorite intrusion and Cretaceous sediments. Gleichen says gold grades are strongest in skarns developed in transitional zones between underlying limestone and overlying sandstone, respectively of the older Morelos and younger Mezcala formations.

Along with news of the acquisition, Gleichen also announced that Fred Stanford, the former head of Vale’s (VALE-N) Ontario operations, will take over from Michael Murphy as Gleichen’s new president and CEO. Murphy will move to the board of directors and will be joined by FNX Mining’s (FNX-T) brain trust, Terry MacGibbon.

For Teck, the transaction is all about paying down once-hefty loans.

Debt-busting Teck is now well on its way out of a financial Jello it had been sinking into after taking on debt worth US$10 billion to acquire Fording Canadian Coal Trust in 2008.

For the third quarter, ending Sept. 30, Teck reported it had eliminated a US$5.8-million bridge loan and slashed a US$4-billion term loan down by US$1.3 billion.

As of Sept. 30, Teck’s asset sales, proceeds of which are destined to lower the term loan even further, came to US$1.1 billion. Teck has about US$1.5 billion in the bank.

Goldcorp (G-T, GG-N) owns the remaining 21.2% interest in the Morelos project.