Glamis finds financing for Marigold

Looking for financing for its Marigold Millennium project in Nevada, Glamis Gold (GLG-T) has arranged a bought deal with $40 million in gross proceeds.

The financing, arranged with Research Capital, BMO Nesbitt Burns, and National Bank Financial, will see the underwriters take down 8 million shares at $5.

An option allows the underwriters to take down an additional 2 million shares before the deal closes. A second option kicks in after the deal closes, and permits the underwriters to subscribe for up to 15% of the number of shares issued on closing.

The deal is at the prospectus stage and requires the approval of securities regulators in all Canadian provinces. It has also been registered with the Securities and Exchange Commission in the United States.

Proceeds will go toward development of Marigold Millennium — specifically, expansion of Glamis’s Marigold mine, 60 km southeast of Winnemucca, Nev., in which Homestake Mining (HM-N) owns a 33.3% interest. A US$45-million program to increase annual production to 150,000 oz. is at the feasibility-study stage.

Prefeasibility work determined that the Marigold project has a minable reserve of 45.3 million tonnes grading 1.13 grams gold per tonne, equivalent to 1.7 million oz. gold. The new reserve estimate includes the newly discovered Millennium deposit, and its economic cutoff is US$275 per oz.

A redesigned pit to exploit the Millennium deposit would have a stripping ratio of 3.9:1. The Millennium resource, which is still open along strike to the north and south, is entirely in oxidized material and would be amenable to heap leaching, like the currently mined Marigold ores. All expansion designs have retained a basic open-pit mine and heap-leach recovery model.

Metallurgical tests have shown that the Millennium mineralization has gold recoveries comparable to the Marigold ores.

The study found that an expansion at Marigold had robust economics, offering a 30% incremental rate of return on the projected US$45-million capital expenditure. Cash costs were pegged at US$144 per oz. and total unit costs clocked in at US$228.

Should final feasibility studies prove positive, Glamis would begin additional production from the deposit’s Terry zone in 2002. In the Section 31 zone, where regulatory permits will have to be in place before mining can begin, production could be under way in 2003.