Midland plans to raise $3.5 million

The money raised would go to pay back $2.9 million advanced by the parent company, Rayrock Yellowknife Resources (TSE), to Midland since October, 1987, for exploration on Midland’s mineral properties in South and Central America.

Then Midland plans to seek a listing on the Toronto Stock Exchange and, if its application is successful, raise further funds. The company has established a $4.1- million exploration budget for 1989.

David Hutton, a vice-president and director of Midland and vice- president exploration and development for Rayrock, says Rayrock will take up any rights not exercised by shareholders in the rights issue.

Midland also faces payments of $348,000(US) in 1989 and $2.5 million in 1990 to retain its 99% interest in the Ivan copper property in Chile (an associated company holds the remaining 1%). Hutton, however, says Midland is confident the project will provide operating income in 1990 to at least partially offset those payments.

The cost of the Ivan property totals $5.7 million, $650,000 of which has been paid so far. After the 1990 cash payment, the balance of the purchase price will be paid through a net smelter royalty that escalates from 2% to 3% after three years of production.

Hutton says project financing is an alternative for raising the capital cost, estimated at $25-$30 million, for the Ivan project. Operating costs are estimated to average 50 cents -58 cents per pound of copper produced over an 8-year mine life.

“We were interested in this project when copper was 65 cents ,” said Hutton. With copper now selling at about $1.50 per pound, the possibility that the project is economically viable is considerably better.

The range in estimated capital and operating costs stems from the company’s consideration of various mining methods and metal recovery methods. Surface reverse- circulation drilling is continuing to more fully delineate the deposit’s upper, oxide ore zone, and that could determine how the deposit is mined. As well, several alternative treatment processes are being evaluated.

The company’s other key project is the Bellavista/Montezuma gold prospect in Costa Rica, a joint venture with Westlake Industries. Preliminary mineable reserves, based on a 3,000-ton-per-day open pit mine and a gold price of $450(US), now stand at 14.2 million tons averaging 0.05 oz gold per ton with a cutoff grade of 0.02 oz.

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