Gold Mountain up on Elk, financing

A junior led by Copper Mountain Mining‘s (CUM-T) CEO, Jim O’Rourke, saw its shares jump as high as 50%, two days after it completed a qualifying transaction and a concurrent financing. 

On July 26, Gold Mountain Mining (GUM-V), formerly a capital pool company called Beanstalk Capital, wrapped up the Elk gold project acquisition from Almaden Minerals (AMM-T, AAU-N), along with a $7.6-million private placement on a non-brokered basis. A day later, its shares began trading on the venture under its new name at 70¢ apiece and gained 10¢ upon closing. On July 28, the stock hit a high of $1.20 before settling at $1.12 per share. 

Almaden agreed to sell its Elk property near Merritt, B.C., in mid-February. In exchange, it received 37 million Gold Mountain shares and a 2% net smelter return royalty. 

The acquisition shares will be subject to resale restrictions and escrow requirements, while another 2 million shares will be held in escrow.

In late June, Almaden said it reached an agreement in principle to assign and sell up to 8.25 million of those shares at 35.5¢ apiece, to fund its Mexican drilling efforts. 

As a part of the listing process, Golden Mountain offered 10.1 million units at 50¢. Each unit consists of one share and a warrant, exercisable at 75¢ apiece until July 26, 2014. The company also issued roughly 4 million shares on a flow-through basis under Canada’s Income Tax Act at 65¢ apiece. 

In January, Almaden reported a positive preliminary economic assessment on Elk. Based on a gold price of US$1,000 per oz., the study envisioned an open-pit mine producing 139,000 oz. gold over a seven-year mine life. At a discount rate of 8%, Elk has a $28.7 million net present value and a 51% internal rate of return. Payback is estimated at 1.85 years. Cash operating costs are anticipated at $528 per oz., with initial capital expenditures of $9.9 million. 

The study didn’t consider the project’s underground potential or last year’s drill results.

The company’s directors include: Rourke; Copper Mountain’s chief financial officer Rodney Shier, now Gold Mountain’s CFO and corporate secretary; Almaden’s president and CEO Morgan Poliquin; Almaden’s chairman Duane Poliquin; Michael Varabioff; and Leo King. Gold Mountain’s officers are Rourke and Shier.