Under the new agreement, which has yet to be approved by regulators and shareholders, each Rayrock shareholder will be entitled to either 2.4 shares of Glamis or 1.6 shares of Glamis and $3 in return for each share of Rayrock.
Glamis received signed “lock-up” letters representing 34% of the subordinate voting shares in favor of the Glamis proposal. The lock-up was to be released upon the receipt of a proposal valued at about $8.25 per share, including cash of at least $3 per share.
“The Glamis deal was marginally superior financially, and Glamis has locked-up enough shareholders to ensure that the Viceroy deal would not go through,” said James Askew, president of Rayrock Resources.
The Viceroy proposal called for Rayrock shareholders to receive $2.50 cash and 1.9 shares of Viceroy for each share held. Also, an additional 1.2 shares of
Blackrock’s board of directors agreed to vote in favor of the Glamis deal. In particular, they also agreed to acquire all of Rayrock’s 10.8% interest in
The agreement between Glamis and Rayrock is not conditional upon the completion of the Magin transaction between Glamis and Blackrock.
Rayrock has US$51.4 million in cash and US$4.2 million in debt. Its core assets are its interests in three open-pit gold mines in Nevada: the 66.7%-owned Marigold mine and the wholly owned Daisey and Dee mines. The company also owns the Ivan copper mine in Chile.
In southern California, Glamis owns two producers — the Rand mine, near Bakersfield, and the Picacho mine, in Imperial Cty. — while, in Mexico, it operates a small heap-leach operation in Mexico. Its key exploration properties include two hot-spring gold occurrences in Latin America: San Martin in south-central Honduras and Cerro Blanco in southeastern Guatemala.
Viceroy owns the Brewery Creek gold mine in the Yukon and has a 75% stake in the Castle Mountain gold mine in California.
In related news, Viceroy has received encouraging news from its Gualcamayo exploration project in Argentina: metallurgical tests indicate that the oxidized mineralization responds well to cyanide extraction of gold. Bottle-roll cyanidation tests were performed on seven oxide samples and on one sulphide sample from drill core. Gold recoveries from 24-hour bottle-roll tests exceeded 92% for oxide samples. The recoveries were greater than 85% after six hours of leaching. Cyanide consumption was low, ranging between 0.04 and 0.24 kg per tonne of sodium cyanide. Cyanidation tests on the sulphide sample recovered 10.8% gold over a 24-hour period and 20.5% over 48 hours.
Viceroy recently released partial results from hole QD-14. At a down-hole depth of 84 metres, the drill cut a 4-metre interval averaging 1.46 grams gold per tonne. Farther down the hole at a depth of 122 metres, a 12-metre intercept averaged 0.9 gram gold. At 166 metres down-hole, a 14-metre intercept averaged 0.5 gram gold. A final intercept cut 30 metres grading 0.895 gram gold at a depth of 234 metres.
Bedrock sampling, performed on widely spaced lines, has traced mineralized marbles for about 1.5 km to the northwest of Quebrada del Diablo zone. Viceroy says this ties the breccia mineralization at Quebrada del Diablo to previously identified skarn mineralization at the Amelia Ines and Magdalena areas.
Viceroy has mobilized a reverse-circulation drill, and systematic drilling from road-accessible sites is under way. The company can earn a 60% interest in the 50,000-ha project.
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