Goldbelt Resources lands Pegasus funding

Partial funding for a gold-silver tailings project in Kazakhstan is at hand for Goldbelt Resources (VSE).

The company has signed an agreement in principle with Pegasus Gold (TSE) for US$18 million. The agreement calls for Pegasus to advance to Goldbelt convertible loans of US$3 million upon completion of a due diligence review, plus a further US$15 million at the point of project financing. Goldbelt has the right to earn a 50% interest in the project by performing feasibility work and arranging financing. A feasibility study was completed early last year and the company has been searching for the estimated US$43 million in capital ever since.

A payback provision in the agreement commits 80% of project cash flow to capital and interest payments, with the balance split between Goldbelt and the Kazakhs. After payback, the project reverts to a 50-50 joint venture. Included are four tailings deposits totaling 150 million tons and grading 0.018 oz. gold and 0.14 oz. silver per ton.

In its first five years, the project is expected to produce about 608,000 oz. gold and 2.5 million oz. silver. Average cash cost: US$100 per oz., including silver credits.

During an initial 90-day period, Pegasus will conduct a due diligence review and, on acceptance, will pay Goldbelt up to US$400,000.

The US$18 million in loans from Pegasus pay interest at prime and are convertible at Pegasus’ option into Goldbelt common stock at 65 cents per share. If converted, the shares would give Pegasus 61.7% of the company on a fully diluted basis.

Robert Swenarchuk, a spokesman for Goldbelt, said Pegasus will help the company finance the balance of the required capital upon completion of the due diligence study. He added that N.M. Rothschild, Goldbelt’s financial advisor, is also working to land the balance of the required funding.