Gutnick finances Tahera

Diamond explorer Tahera (TAH-T) has attracted a potential new major shareholder from Down Under.

The junior announced a proposed private placement financing with Edensor Nominees for between $12.5 and $13.5 million. Edensor is a trustee for the family trust of Australian mining financier Joseph Gutnick.

The private placement will consist of 100 to 106 million shares of Tahera at a subscription price of 12.5, plus an additional 50 to 53 million share purchase warrants exerciseable at 15 over a period of 48 months. With currently more than 176 million shares outstanding, the financing will leave Tahera with 282 million, or 395 million fully diluted.

The transaction will result in Edensor owning a 30% stake in Tahera, with three directors on Tahera’s board. Gutnick will be one of the three, sitting as non-executive chairman.

The deal is subject to a number of conditions, including the signing of definitive private placement agreements, completion of due diligence and regulatory approval.

Tahera is currently awaiting the results of a final feasibility study of its wholly owned Jericho project in Nunavut, 420 km northeast of Yellowknife, N.W.T. The company is proceeding with Jericho as a stand-alone operation after it was unable to resolve technical issues with Echo Bay Mines (ECO-T) over the implementation of the 1996 Lupin mine facilities-use agreement.

A prefeasibility study completed in late 1999 by SRK Consulting indicated that a proposed open-pit operation on the land-based JD-1 pipe could produce a total of 2.7 million carats over an 8-year mine life, based on a processing rate of 300,000 tonnes per year. Estimated capital costs of $40.3 million included the construction of a 50-tonne-per-hour plant at the site of the Lupin gold mine. Costs of building the processing plant at Carat Lake, adjacent to the Jericho kimberlite, are expected to add approximately $4.5 million to Jericho’s price tag.

The prefeasibility study estimated a minable, open-pit resource of 2.3 million tonnes grading 1.13 carats per tonne within a geological resource of 6.5 million tonnes averaging 0.82 carat per tonne. The diamonds were valued at an average of US$65 per carat ($96 per carat), or US$73.45 per tonne ($108.48 per tonne). Operating costs were pegged at $63 per tonne.

SRK recently revised the resource estimate based on an additional 2,200 metres of drilling completed from December 1999 through February 2000 to provide better definition of the geometry of JD-1 at depth. The pipe is now estimated to contain an indicated and inferred resource of 7.1 million tonnes at an average grade of 0.84 carat per tonne.

In January, SRK recommended the use of an average modeled diamond value of US$74 per carat, a 14% increase over the diamond valuation used in the prefeasibility study, based on the subsequent valuation work by WWW International Diamond Consultants. Using the US$74 per carat value, the project has a predicted internal rate of return of 44% and payback of 1.6 years.

In a separate exploration campaign, Kennecott Canada Exploration recently discovered two new kimberlites on ground held through a joint venture with Tahera. The Rio Tinto (RTP-N) subsidiary can earn a half-interest in the Ice, Rockinghorse and Hood River properties in Nunavut and the Northwest Territories by spending $50 million in exploration by 2008. Kennecott has spent about $16 million to date.

During the spring 2000 drilling program, Kennecott made its first kimberlite discovery on the Hood River property, 110 km north of the Jericho project. Preliminary core drilling of the Tenacity discovery determined the kimberlite body has a surface expression of approximately 80 by 100 metres.

A new kimberlite, called Nanurjuk, was intersected by two drill holes at the Rockinghorse property, 70 km west of Jericho. The kimberlite occurs as a series of stacked thin sills up to 3 metres thick, spaced 3 to 4 metres apart. Samples from both discoveries are undergoing microdiamond testing at Kennecott’s laboratory in Thunder Bay, Ontario.