High River to consolidate Jilbey

Eyeing a bigger slice of the promising Bissa project in Burkina Faso, High River Gold Mines (HRG-T) plans to swap its own shares for those of Jilbey Gold Exploration (JLB-V) that it does not already own.

High River is offering 0.75 of one of its own shares for every Jilbey share; the exchange rate values Jilbey shares at $1.02 apiece, a 29% premium to Jilbey’s closing price of 79 in Vancouver on June 17, the day prior to the announcement of the deal.

Jilbey’s board of directors has approved the transaction, and plans to put it before its shareholders in August. The deal is subject to regulatory approval.

High River already holds a 29% stake in Jilbey, and has agreed to fund ongoing exploration on Jilbey’s properties. The two are also already partnered under a strategic alliance that gives High River back-in and operatorship rights on gold discoveries found within trucking distance (less than 100 km) of the Taparko mill. It also allows the company the right of first refusal on discoveries outside trucking distance.

The Bissa project is part of Jilbey’s 5,300-sq.-km land package in Burkina Faso’s prospective greenstone belts. Measured and indicated resources total 1.4 million tonnes grading 3.33 grams gold, based on a cutoff of 0.5 gram gold. An additional 106,000 tonnes grading 2.89 grams are classified as inferred.

Mineralization at Bissa has been traced over 5.5 km along the 30-km-long Sabce shear zone. The company is currently following up on several significant geochemical anomalies identified along the remainder of the zone.

The latest batch of reverse-circulation drilling at Bissa targeted the Bissa Southwest zone, and the Bissa Extension deposit; highlights include 37.5 grams gold over 4 metres, 17.9 grams over 8 metres, and 10 grams over 4 metres. The company has since moved a second drill rig onto the project.

An updated resource estimate is expected by the end of the year.

Jilbey is earning a 70% interest in the 900-sq.-km Bissa Hill and Zandkom permits by completing a feasibility study on the properties. The property is optioned from GEP Mines, a private company in Burkina Faso.

Jilbey also holds various interests in several gold, base metal, and diamond prospects in Canada.

High River’s holdings include some 2,300 sq. km in Burkina Faso, including the construction-phase Taparko-Bouroum gold project, which is slated for production in early 2006. The operation is expected to initially produce around 100,000 oz. of gold per year, ramping up to more than 140,000 oz. in its third year of operation. At last count, reserves totalled 7.6 million tonnes averaging 2.9 grams gold per tonne

High River holds an 80% interest in Taparko, with the government of Burkina Faso holding the rest. Three-quarters of the government’s interest is carried.

Elsewhere, High River continues to drill the Labola gold property, where reconnaissance drilling recently turned up some narrow, high-grade intervals, including 2 metres running 32.9 grams gold at the southern end of the main Central zone.

High River’s other interests include an 84.9% stake in Russian gold producer Buryatzoloto, and a 99% interest in the Berezitovy project in southern Siberia (the State property fund in the Amurskaya Oblast region owns 1%).

Reserves at Berezitovy stand at 13.9 million tonnes running 2.3 grams gold and 11.7 grams silver. The US$59-million operation is expected to churn out 100,000 oz. of gold per year at a total cash cost of US$192 per oz., over 9 years. The first gold pour is expected in the first half of 2006.

News of the deal saw shares in Jilbey trading 11, or 14%, higher at 90 in late afternoon trading in Vancouver on June 20; High River was off 8, or about 6%, at $1.29 in Toronto.

In other news, High River recently sold 3 million shares of Intrepid Minerals (IAU-T) at 45 per share for gross proceeds of $1.35 million. The company retains nearly 1.8 million shares.