Metallica issues shares to Franco

Denver — In return for a loan used to purchase the Mara Rosa gold property in Brazil, Metallica Resources (MR-T) has issued 2.2 million shares to Franco-Nevada Mining (FN-T).

In 1997, Franco guaranteed payment of US$1.1 million to former property owners in return for shares, equal to the amount of the debt owed, plus a 1% net smelter return royalty.

Metallica repaid the line-of-credit in November 1999, and Franco elected, as per the agreement, to receive the shares based on a 20-day weighted average immediately preceding that repayment.

The new shares increase Metallica’s outstanding shares to 26.8 million, giving Franco 8% of the company. Regulators have yet to approve the transaction.

Metallica and Franco are discussing the possibility of restructuring the royalty interest.

Mara Rosa consists of 25,000 ha in the central state of Goias, 350 km northwest of Brasilia. The underlying geology includes the Archean-to-Proterozoic Mara Rosa greenstone belt, which hosts the Crixas and Chapada deposits. From 1989 to 1995, 86,000 oz. gold were extracted from those two deposits. A third deposit, Posse, contains a proven and probable reserve of 75,000 oz. in 1.2 million tonnes grading 2 grams gold per tonne.