Dayton decides to go it alone

After a series of fruitless merger proposals, Dayton Mining (TSE) has decided to develop the Andacollo project on its own, for the time being.

The project, in central Chile, was last estimated to contain proven and probable minable reserves of 30.7 million tons grading 0.035 oz. gold per ton. Preliminary feasibility work projects an annual output of more than 125,000 oz. gold at an average cash cost of US$170 per oz.

Dayton is reviewing the placement of US$13 million in convertible debentures through broker Burns Fry. The proposed debenture issue would have a 5-year term, pay 7% interest and be convertible into common stock at about $3 per share.

Assuming the placement is fully subscribed, and taking into account the repayment of a US$5-million loan to Pegasus Gold, the company will have about US$9 million in working capital to explore and develop Andacollo. It plans to continue with development work, in preparation for construction. Bechtel Financial Services is providing financial advice and arranging bank project financing. Meanwhile, Bechtel Mining & Metals will provide a fixed-price contract to build a 14,000-ton-per-day heap-leach facility. Some proceeds from the debenture offering will finance a drilling effort to expand known reserves and test eight other deposits not currently included in reserves.