Glencairn Gold will sell its Cerro Quema project in Panama

Glencairn Gold (GGG-T, GLE-X) is selling its Cerro Quema gold project in Panama to Bellhaven Copper & Gold (BHV-V, BHVCF-0) for a total of US$6 million.

The troubled Canadian junior is also mulling a number of other financing alternatives that may include equity financing or changes to its capital structure so that it can focus its exploration efforts on the Nicaraguan gold belt.

Cerro Quema was a non-core asset, explains Peter Tagliamonte, Glencairns president and CEO. It is a good property and Im sure it will be a very good asset, but were trying to focus on our core assets located in Nicaragua and Cerro Quema was a bit too small and would distract us.

Bellhaven previously owned 40% of Cerro Quema, 190 km southwest of Panama City, and holds several other exploration projects in Panama.

Cerro Quema has 15 million tonnes in measured and indicated resources grading 0.93 gram gold per tonne.

I think its a fair price I think it reflects value for shareholders, Tagliamonte says.

Glencairn has had a hell of a year. In August, second quarter results revealed that the Toronto-based companys income had plummeted to US$1.5 million, down from US$3.8 million for the same period last year.

A month earlier, operations at its 100%-owned Bellavista mine in Cost Rica were suspended following ground movements of about one centimetre per day in sections of the leach pad and waste pile at the open pit gold operation.

Tagliamonte says the company must complete engineering work at Bellavista to determine the best way forward.

Were not confident that it will re-open as a heap-leach mining operation, he says. There is a possibility that this mine could be re-opened as a conventional milling operation.

For now Glencairn has successfully rinsed and removed all the cyanide from the site and will record an impairment charge of about US$40 million to US$50 million in its financial results for the nine months ending September 30.

With the sale of Cerro Quema expected to close by October 31 — Glencairn will focus on its properties in Nicaragua.

Were sitting on a market capitalization of US$48 million and we produce 120,000 ounces of gold, Tagliamonte says. We are extremely undervalued and weve got to get going to develop that value for our shareholders.

Its 95%-owned Limon mine in northwestern Nicaragua reported 2006 gold sales of 33,067 oz. The underground mine holds proven and probable reserves of about 1.2 million tonnes at 5.3 grams gold.

Glencairns La Libertad gold deposit, 110 km east of the Nicaraguan capital of Managua, holds an indicated resource of 16.3 million tonnes of 1.5 grams gold. It was acquired in July 2006 but operations were suspended in March 2007 to undertake a feasibility study.

The study will determine whether the project can be converted to a conventional mill operation from its current configuration as a heap-leach project. The results are expected early next year.

In Toronto, news of the Cerro Quema sale sent Glencairns shares down $0.02 to close at $0.20 on a trading volume of 4.9 million shares. Bellhavens shares remained constant at $0.95 apiece.