Deak International private placement (August 19, 1991)

Deak International Holdings has completed a private placement designed to reduce the amount owed to it by affiliate Deak Resources (TSE).

But plans to install a base metal circuit at Deak’s Kerr mill near Kirkland Lake, Ont., and begin mining the 49.9% owned West MacDonald zinc-silver mine in Quebec remain on hold pending future financing.

By acquiring 7.6 million shares of Deak Resources for 25 cents each, Deak International has increased its stake to 12.2 million shares representing a 31.4% interest. Proceeds of the private placement are designed to prepay $1.9 million principal amount of secured debentures held by Deak International due July 7, 1992. As a result, the amount owed by Deak Resources to Deak International has dropped to $1.5 million, of which $1.46 million is due on the same date as the debentures.

Pending regulatory approval, Deak International has agreed to increase its stake in Deak Resources to 14 million shares or 36.3% by acquiring an additional 1.8 million shares at 30 cents each. Deak International has warrants to acquire a further 1.1 million shares at 25 cents each by June 21, 1993.

Deak Secretary Douglas Hume says the company needs about $7 million to install a base metal circuit at the Kerr mill and about $500,000 to begin mining the West MacDonald deposit. Held 51% by Noranda (TSE), West MacDonald contains 1.8 million tons of 5.4% zinc.