A syndicate led by First Marathon Securities sold 3 million special warrants priced at $3.75 each. The financing was oversubscribed by 330,000 warrants. Each special warrant is exercisable at no additional cost for one unit, which consists of one share and half a warrant. One whole warrant entitles the purchase of an additional share at $4.50 any time before June 14, 2004.
Over a 12-month period, Manhattan will advance the project through the prefeasibility stage. The program will include 50,000 metres of reserve definition and exploration drilling, geophysical surveys, metallurgical tests, and environmental base-line, engineering and socio-economic studies.
Manhattan holds the right to earn a 75% interest in the project, with the remainder held by the Peruvian government.
The Tambo Grande concessions host at least one polymetallic VMS deposit, dubbed TG-1, plus seven other geophysical gravity anomalies within a 5-km radius. TG-1 is estimated to contain an inferred open-pit resource of 42.3 million tonnes grading 2.04% copper, 1.47% zinc and 0.36% lead, plus 37.7 grams silver per tonne, at a projected stripping ratio of 2-to-1. The seven other anomalies have yet to be drill-tested.
Two drill rigs are already at work in an initial attempt to extend the TG-1 deposit to the south. A third rig will be mobilized shortly.
The company also owns and operates the Moris open-pit, heap-leach gold mine in Mexico’s Chihuahua state. For the first three months of 1999, the mine produced 6,300 oz., unchanged from the first quarter of 1998. Cash costs between the two periods rose to US$220 from US$199 per oz.
In March, severe drought conditions caused a shortage of water in the solution ponds, reducing leaching capabilities. The company has been forced to curtail mining and crushing as it focuses on maintaining flows on the heaps and through the adsorption/desorption recovery plant. Production is expected to be reduced somewhat in the second quarter.
Last year, the mine produced 21,100 oz. gold and 78,000 oz. silver at a cash operating cost of US$252 per oz., following a gold-in-process inventory adjustment. Before inventory adjustments, cash costs were US$348 per oz.
Minable reserves stand at 3.4 million tonnes grading 1.73 grams gold and 6.67 grams silver per tonne at a stripping ratio of 1.5-to-1. Under the current mine plan, reserves will be exhausted in 2002, with leaching and heap neutralization to continue into 2003.
Manhattan recorded a loss of US$417,000 (or US2 cents per share) on sales revenue of US$1.9 million for the first three months of 1999, compared with earnings of US$335,000 (US1 cents per share) on US$2.4 million during the corresponding period last year.
Despite a lower realized gold price of US$302 per oz., versus US$388 per oz. in the first quarter of 1998, operations generated a cash flow of US$$128,000 (US1 cents per share), compared with a cash flow of US$839,000 (US3 cents per share).
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