Glencairn seeks financing after Aur deal terminates

A report completed by the company’s engineering consultant concludes that the property be placed into production on a pilot plant basis. Kerry Knoll, president of Glencairn, says the company requires $1 million in order to complete the capital expenditures needed to begin diamond production.

An agreement for future funding with Aur Resources (TSE), a Canadian gold mining company, has been terminated. Aur had the option to fund Glencairn to production in return for treasury shares of the company.

The production on a pilot basis was recommended in order to allow Glencairn to accurately determine the grade of the gravels, Knoll says. Grade determination from drill core in diamond mines, both alluvial and hardrock, is difficult. As a result, bulk sampling is required, which in the case of the Feijao Cru, means production.

A test pit completed by Glencairn last year yielded 11 diamonds ranging in grade from 0.07 carats to 0.47 carats per cu m. However, the test program had to be curtailed due to severe water inflows which precluded detailed sampling by a backhoe. Only 60 cu m of gravels were removed, Knoll says. Another test pit completed in 1987 yielded an average grade in excess of one carat per cu m. Current prices for diamonds from this area of Brazil exceed $100(US) per carat.

However, the test pit completed in 1988 enabled Glencairn to determine that the best and most efficient mining method is a series of slurry pumps mounted on dredges.

Glencairn estimates that it needs $1 million to fund its capital requirements. Although new equipment costs, including contingencies, are estimated at $1.2 million(US), Knoll says several international banks have approached the company with debt-equity swap proposals. This would effectively reduce start-up costs to $670,000(US).

Glencairn has the right to earn a 50% interest by financing the property to production by making expenditures to a maximum of $550,000. The company has fulfilled its exploration committments of $450,000.

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