After completing a due diligence review of the Table Mountain mine, Cusac Industries (TSE) plans to proceed with the purchase of the gold project near Cassiar, B.C.
The project is owned by Total Energold (TSE) while Cusac holds a 30% net profits interest.
Guilford Brett, president of Cusac, said the company is in advanced negotiations with Total Energold and expects to finalize an agreement by the end of January.
Brett said the acquisition will likely take the form of a purchase option with a small up-front cash payment followed by a larger final cash payment at a later date.
Brett did not reveal a projected purchase price although he described the price as “fire sale,” relative to the estimated $18-20-million asset value of the project.
Assets include a 300-ton-per-day flotation mill valued at $3.6 million as well as about $1 million in heavy equipment, mining equipment, and support equipment.
Production at the mine ceased in 1988 and Total began driving a 7,000-ft.-long adit to a new high-grade zone. The work was suspended at a length of about 5,000 ft. and exploration funds were redirected to surface exploration, resulting in the discovery of the Bain vein.
Subsequent drilling outlined the vein over a strike length of over 2,800 ft. with numerous intersections grading over one ounce gold per ton over widths of 4-6 ft. Preliminary estimates by Cusac put reserves in both areas at 220,000 tons grading 0.67 oz. gold per ton.
Brett said Cusac should have sufficient funds to meet the initial option payment and further financing is planned to raise additional capital. Cusac has about seven million shares outstanding on a fully diluted basis.
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