Pinegrove shares offered only to Hong Kong emigrants

Calgary-based Pinegrove Resources (ASE) has become one of the first junior mining companies in Canada to use the federal government’s Immigrant Investor Program to raise funds for a placer gold mine in the Yukon. Pinegrove has interests in both placer and hard rock properties in British Columbia and the Yukon, but the recent depressed market conditions in Canada have sent the company overseas in search of new capital.

Elmer Stewart, a director of Pinegrove, said the federal government recently approved a unit offering by the company which if fully subscribed will raise a total of $3 million. The offering is open to persons wanting to immigrate to Canada, and is being marketed in Hong Kong.

The debenture offering comprises units worth $150,000 each and is predicated on the investor being issued a visa to immigrate to Canada. If the investor is denied a visa for whatever reason, his investment will be returned. Canada Trust is acting as the escrow agent for the offering.

The interest on the debenture is 8% and the investors can choose to have their interest paid in cash or gold from the placer mining operation. The principal will be repaid after three years, or alternatively the investor can receive 50% in cash and the other half in shares. The conversion price is the average for the 30-day trading period prior to redemption.

“We didn’t want to compete with other junior companies which are trying to raise money by flow-through financings and private placements,” Stewart told The Northern Miner in an interview. “We wanted to try something that was totally different.”

He said the immigrant investor funding program appeared to be an excellent alternative in that it appealed to the people immigrating from Hong Kong due to the impending takeover by China by 1997.

Proceeds from the offering will be used to place the company’s Haggart Creek gold placer project in the Yukon into production.

According to Pinegrove, the small operation is expected to yield 4,000 oz. of gold annually based on reserves sufficient for five years of production.