Novagold eyes $20 million, Metallica sees $7 million

Vancouver – With investor interest in gold and base metal stocks picking up, junior explorers are eyeing the prospects of adding much needed funds to their coffers by issuing shares.

In an effort to speed up development of the Donlin Creek gold deposit in Alaska, NovaGold Resources (NRI-T) has tabled a $20 million private placement.

Salman Partners will act as the lead agent in a syndicate including BMO Nesbitt Burns and Griffths McBurny to raise the funds on a best efforts basis. The deal prices each Novagold unit at $3.50. One unit holds one share and half a warrant. A full warrant entitles the holder to purchase one additional share at $4.50 for an 18-month period. The financing is expected to close by April 18, 2002.

The funds will be used for the pre-feasibility and feasibility studies on the Donlin Creek deposit and for general working capital.

A new study, conducted by MRDI Canada, suggests Donlin Creek can support an annual production rate of 1 million oz. with a capital investment of $602.1 million. The mine plan envisages an open-pit operation capable of extracting 20,000 tonnes per day of mineralized material in each of 14 years at an average stripping ratio of 5.9-to-1. Headgrades and recovery rates would be higher in the first five years, resulting in just over 10 million oz. of production over the life of the mine. All of the operating and economic projections are based on near-surface resources totalling 166.4 million tonnes averaging 3.6 grams per tonne. The resource, in turn, is based on a cutoff grade of 2 grams and includes material in the measured (3% of the total), indicated (41%) and inferred (56%) categories.

NovaGold can earn a 70% interest in the deposit by spending US$10 million on exploration and development within 10 years.

An aggressive financing program over the past month has prompted Corriente Resources (CTQ-T) to seek shareholder approval for more than a 25% dilution of its stock.

The latest deal is a $1 million private placement with its copper exploration partner, BHP Billiton (BHP-N). Under the agreement, Corriente will issue 740,740 units priced at $1.35 each. Each unit holds one share and one warrant, allowing BHP Billiton to purchase one share for $1.35 within two years.

This financing, plus a March 8 brokered $2.5 million private placement, marks more than a 25% dilution of its stock over a six month period allowed by the Toronto Stock Exchange without shareholder approval. The junior will seek shareholder approval of the latest financing at its annual general meeting on May 22, 2002.

Corriente has been actively exploring four known copper porphyry systems in southern Ecuador in partnership with Lowell Mineral Exploration and BHP Billiton. Last year, Corriente joined forces with BHP Billiton to explore base metal projects all over the world, starting with the Mumbwa copper-gold project in Zambia.

Metallica Resources (MR-T) hopes to raise $7 million by selling Canaccord Capital 3.9 million units priced at $1.80 each. A unit holds one share and half a warrant. A full warrant allows the holder to purchase an additional share for $2.25 over the period on one year. The closing date on the deal is slated for April 16, 2002.

Noranda (NRD-T) has be advancing Metallica’s promising El Morro copper-gold project in Chile. Under the deal, the major can earn a 70% stake in the property by spending $10 million and paying $10 million by Sept. 2005. In addition, Noranda must complete a bankable feasibility study on the project by Sept. 2007.