Major league Gold – share to double for Lacana Mining

Lacana Mining looks to be moving rapidly into the major leagues amongst gold producers in Canada.

For starters, the company has concluded a $150 million deal with Royex Gold Mining Corp., which will give Lacana a 51% interest in Mascot Gold Mines and boost Lacana’s annual share of gold output from a current 50,000 oz to about 125,000 oz or more.

And, newly-elected Lacana President Gil Leathley tells The Northern Miner, that figure could be up to 180,000 oz annually, with future production from the Santa Fe property in Nevada, the Sulphurets property in B.C., and possibly the Musslewhite deposit in northern Ontario.

In the Mascot deal, Lacana acquires 9,959,596 shares of Mascot from Royex, for a 51% interest. The $150 million purchase price consisted of $65 million in cash, a $25 million promissory note, and $60 million in preferred shares of a Lacana wholly-owned subsidiary.

The preferred shares are convertible into Lacana common shares at $10 per share. Mr Leathley said his company does not propose a follow-up offer to Mascot shareholders.

“The move comes at a good time for Lacana,” he said. Lacana currently gets about 50,000 oz in gold per year, derived from its interests in the Pinson and Preble and Dee mines in Nevada, and its interest in the Torres gold and silver mine complex in Mexico.

As noted, the acquisition of the Mascot interest will more than double Lacana’s annual share of gold output, to about 125,000 oz or more. Production is planned to start in mid-1987 from Mascot’s Nickel Plate open pit gold mine, at Hedley, B.C., at a rate of 2,7000 tons of ore per day.

Mascot has proven open pit reserves of 8.3 million tons, grading 0.14 oz gold per ton.

Mr Leathley said financing for the cash portion of Lacana’s purchase has been provided by a Canadian chartered bank, on a limited recourse basis.

Mascot is expected to produce 150,000 oz of gold in calendar 1988.