Queenston revs up printing press

Higher demand for its paper has prompted Queenston Mining (QMI-T) to increase the size of a private share offering.

The placement now consists of 6.25 million units priced at 80 apiece. Half the units can be exchanged for common shares, and the other half, for flow-through shares. Each unit comes with a half purchase warrant. A full warrant entitles the holder to acquire, at 95, a common share within 18 months of the deal’s closing.

The offer promises to generate $5 million in proceeds. The earlier offer was capped at $4 million worth of units. The closing date is set for mid-July.

National Bank Financial remains the lead underwriting agent.

Queenston will use the funds to buy Newmont Mining‘s (NEM-N) half-stake in its Kirkland Lake joint venture and fund ongoing exploration in that region of Ontario, as well as at the Lake Abitibi gold project, 80 km to the north.

Queenston can acquire Newmont’s interest for $3 million in cash and $865,500 worth of treasury shares. In return, the junior gains full control of 713 claims covering 115 sq. km, an office-warehouse, and a mill-tailings complex.

Newmont, which acquired its stake through the takeover of Franco-Nevada Mining earlier this year, will retain a nominal net smelter return royalty. The royalty follows a sliding scale, based on gold prices.

The past-producing Kirkland Lake property contains five deposits — Upper Canada, McBean, Anoki, AK and 180 East, as well as numerous showings. Combined, the deposits host measured and indicated resources of 4.1 million tonnes grading 5.6 grams gold per tonne plus inferred resources of 4.5 million tonnes at a grade of 5.3 grams gold.

Diamond drilling is scheduled to begin after the deal closes. Eight areas have been sighted for immediate follow-up.

The Lake Abitibi gold property consists of 854 claims covering 138 sq. km underlain by volcanic and sedimentary rocks. A major, east-west-trending deformation zone separates the two rock packages.

Queenston is in the midst of a 7-hole, 2,500-metre drill program, which is testing five areas outlined by earlier geophysical and till- sampling surveys. The targets underlie lakes or ponds and may reflect gold-bearing volcanic and porphyry-hosted quartz-carbonate vein systems.

Previous exploration on the property was limited to geophysical surveying, till sampling and prospecting. The work led to the discovery of several auriferous quartz-veined boulders, placer gold-bearing glacial sediments, and possible structural flexures off the main structure.

Following the financing and Newmont’s transaction, Queenston will have $11 million in working capital. It remains debt-free and has 28 million shares outstanding. Queenston has traded between 30 and $1.07 over the past year, and raded at 85 at press time.