Armistice ponders rights offering

A rights offering is being considered by Armistice Resources (ME) as a means of clearing up its working capital deficit troubles, President Frank Smeenk told shareholders at the recent annual meeting. Smeenk said the deficiency has been reduced to $153,883 from about $2 million. During the years when flow-through financing was available, the company was able to raise $16 million for its exploration work but with cost overruns, it spent close to $18 million. Current market conditions limit the company as to how it is able to raise needed funding.

Armistice’s main prospect is its gold project at Virginiatown, Ont., where an exploration program has been drawn up to test the theory that the orebody of the adjacent Kerr mine downfaulted at its western boundary and continued on to the Armistice property.

When its funding dried up, Armistice struck an option agreement with GSR Mining whereby the latter may earn up to a 50% interest in the Armistice property through exploration worth a total of $5.5 million. GSR is controlled by Deak Resources (TSE). The Deak group bought the old Kerr mill, which is currently processing about 1,000 tons of material per day.

GSR’s plan is to drift into the Armistice property at the 3,850-ft. level from the existing Kerr mine workings and drill from underground. To date, GSR has spent about $600,000 on drift rehabilitation. Smeenk said GSR remains intent on completing the extension of the drift on to the Armistice side.

Armistice has about 21 million shares outstanding. Elected to serve on Armistice’s board of directors were Smeenk, Harvey Atkin (chairman), Guy Hinse, Gregory Smith, Douglas Towers and Brian Davidson.