Belmoral moves in on Magino and Magnacon gold assets

Juniors Flanagan McAdam Resources (TSE) and Muscocho Explorations (TSE) may yet be saved from the jaws of bankruptcy by the Magnacon and Magino gold projects. Belmoral Mines (TSE), making progress on its own short-term debt problems, has offered the juniors $9 million for their combined 75% interest in the Magnacon mill and related infrastructure. Belmoral is also expected to purchase working and ownership interests in the Magino gold mine and Magnacon mine property, near Wawa, Ont., for an undisclosed amount.

In the opinion of Belmoral President Gordon Strasser, the two gold projects are a bargain.

“Previous owners and operators have invested about $150 million in the project and it strikes me as a very good opportunity,” Strasser said. “It’s like real estate — it’s a buyer’s market.”

Magnacon is estimated to contain reserves of 1.47 million tons grading 0.18 oz. gold per ton. Reserves at Magino are estimated to be 1.6 million tons grading 0.15 oz.

Strasser added that Belmoral is in a better financial position after selling off many of its assets to reduce a crippling debt. Most recently, Timmins Nickel (TSE) agreed, subject to regulatory approval, to acquire Belmoral’s debt and 35.6% equity interest in Vedron (TSE) for $650,000.

Vedron owns a Timmins-area gold property with proven and probable reserves of 418,992 tons at 0.16 oz. gold above the 650-ft. level.

Other Belmoral sales in recent months include a 50% interest in the Astoria gold property, a 38% interest in Canreos Minerals (VSE), a 50% stake in a package of Val d’Or gold properties and a 22% interest in Roddy Resources (TSE).

“We have had to dispose of some assets in order to eliminate our deficit,” said Strasser. “With those debts now under control it’s time to look for reserves and production.” Strasser would not say what Belmoral’s debt now is.

Proceeds from the proposed Magnacon sale, which remains subject to board approval of all companies, due diligence, and regulatory approval, would be used to pay creditors of both Muscocho and Flanagan McAdam.

During the past year, the two juniors have been jilted twice by majors interested in the Magnacon and Magino properties. Last April, Echo Bay Mines (TSE) walked away from a $76-million investment in the Muscocho group and cancelled a major refinancing agreement. In December, 1990, Hemlo Gold Mines (TSE) called off negotiations to purchase the Magnacon mill and related surface rights for $9 million, citing environmental concerns.