Glencairn closes $11.5 million equity financing

Vancouver — Glencairn Gold (GGG-T) has closed a private placement worth $11.5 million. The company plans to use the net proceeds from the financing to begin construction of its Bellavista gold project in Costa Rica as well as for general corporate purposes.

The financing consisted of 13.5 million units at a price of $0.85 per unit. Each unit is comprised of one common share and one-half of one common share purchase warrant. Each warrant entitles the holder to purchase a common share of the company at a price of $1.25 for 5 years after closing.

The size of the offering was increased from $10.2 million to $11.5 million upon the exercise of the over-allotment option granted to the underwriting syndicate. The syndicate was led by Orion Securities and included Desjardins Securities and Canaccord Capital.

Glencairn currently is in negotiations with several banks and other financial institutions to raise the remaining funds necessary to build the Bellavista mine. The mine has an estimated capital cost of US$26 million and is expected to produce 60,000 ounces of gold per year over a 7-year mine life beginning in early 2005, at a cash operating cost of US$163 per ounce.

In early 2002, Glencairn inked a deal with Wheaton River Minerals (WRM-T) to acquire the property for US$250,000 and 750,000 shares. Glencairn aims to build an open-pit, grind-agglomeration, heap-leach mine to exploit an epithermal reserve of 11.2 million tonnes grading 1.54 grams gold per tonne. The proposal is essentially the one tabled by Wheaton in 1999. That study, which was based on a Gold price of US$325 per oz., generated US$62 million in net cash flow, excluding preproduction and financing costs. Assuming a Gold price of US$350 per oz., Bellavista generates a healthy 33.2% internal rate of return and has a payback period of 3.7 years. The net present value varies from US$41 million, using no discount rate, to US$11.3 million, using a 15% rate.