Ketza costing Canamax $5 million

Canamax recently agreed to acquire the 50% stake in Ketza that it did not already hold after Belmoral Mines (TSE) elected not to go ahead with the purchase of Canamax’s interest. After suffering substantial start-up problems, the Yukon-based operation is expected to produce 35,000 oz gold this year.

Canamax says it will assume the interest in Ketza previously held by Pacific Trans-Ocean (PTX )and lenders Central Capital Corp. of Toronto and Lloyds Bank Plc. by issuing 650,000 common shares in addition to the 1.4 million announced in May.

The additional shares will bring the total number of shares to be issued in connection with the Ketza deal to about two million. Toronto- based investment dealer Bunting Warburg is committed to buying 850,000 Canamax common shares (excluding the 650,000 shares previously referred to) and 400,000 share purchase warrants.

According to Canamax, the difference between $2.9 million and the amount to be realized by Lloyds from the sale to Bunting Warburg will be comprised of up to 650,000 Canamax shares issuable to Lloyds at about $2.65 per share.

Canamax said it is undertaking to file a new prospectus for a secondary offering of the 850,000 shares which Bunting Warburg is acquiring. At the request of Bunting Warburg, Canamax has withdrawn it preliminary prospectus for a proposed secondary offering and new issue of units.

“In fairness to all our shareholders, we considered it inappropriate to proceed with a treasury issue at this time,” said Canamax’s new Chairman Wayne Lenton. He succeeds Charles Stott who resigned last month from his former position as Chairman and director of Canamax.

Lenton is now chairman, president and chief exective officer of the Toronto company which is moving its corporate offices to Vancouver, July 31.

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