Espalau to acquire Bachelor Lake shares

Debt-heavy Bachelor Lake Gold Mines (ME) will be taken over by Espalau (ME).

Under an agreement, Espalau will acquire all of the issued and outstanding shares of Bachelor Lake, as well as Bachelor’s outstanding indebtedness of $7.5 million currently held by QSR (TSE) and Bachelor bond holders. The acquisition of all the Bachelor shares, including those held by QSR (4.2 million), will be done on the basis of 15 Bachelor shares for one Espalau treasury share.

The acquisition of $5 million debt from QSR will be satisfied by the issuance of a $500,000, 4-year-term, 5% debenture, convertible either in whole or in part into treasury shares of Espalau at $2 per share during the first 12 months, $2.50 during the next 12 months and $3 during the last 24 months. The remaining $2.5 million in debt held by Bachelor bond holders will be acquired through the issuance of 1 million Espalau treasury shares and 400,000 purchase warrants exercisable at $2 during the first 12 months and $2.50 during the second 12 months.

After the transactions, Espalau will be the sole shareholder of Bachelor. Espalau hopes to begin exploring the Bachelor Lake mine within the next year, with a view to possibly reopening it. The mine, which includes a 500-ton-per-day mill, contains about 650,000 tons gading 0.23 oz. gold per ton.

In other news, drilling by Espalau at the Dona Lake mine, near Pickle Lake, Ont., has extended the Main zone. Results from two holes indicate that the zone now extends an additional 66 metres to a depth of 571 metres. Reserves in the zone are calculated at 297,000 tons grading 0.22 oz.