Borealis borrows $25 million to finance Fat Lake prospect

Using its Fat Lake gold project as collateral, Calgary-based Borealis Exploration (ASE) has arranged for a gold backed bond from a U.S. investor group for $25 million(US), the company said recently.

Under an agreement, Whytecliff Investments of New Jersey is issuing the loan to Borealis on a non- recourse basis and the Calgary company will receive $5 million by Oct 2. Bonds are to be issued in $100,000 increments for eight years at an annual interest rate of 3%.

Borealis says it will make the payments on principal and interest on each bond from gold produced from the Fat Lake project in the Northwest Territories.

The 1,600-acre property is located in a remote area where transportation and other costs mean that grades must be relatively higher than more accessible regions like Val d’Or, Que., or Timmins, Ont.,in order to be considered economic.

As reported (N.M., July 11/88), Borealis is attempting to prove up enough reserves in four Fat Lake vein systems to warrant a 1989 production decision.

Proven reserves down to 67 m on Vein Nos 99 to 103 stand at 52,500 tons of grade 0.325 oz gold per ton. Drill indicated reserves to a depth of 200 m stand at 18,400 tons of grade 0.307 oz.

A 100 ton-per-day test mill was commissioned in late 1987 but Borealis is focusing on underground exploration where drilling is being conducted from a ramp which is down to the 40 m level.

“Payments are to be made at a gold price of $550(US) per oz,” said Cox. The agreement also calls for self liquidating payments of principal in equal installments during the first five years of the term of each bond. Quarterly interest payments are scheduled to begin when each bond is issued.

“Proceeds from the loan will enable us to accelerate our schedule in achieving our objectives for the Fat Lake property,” said Cox.