Reunion gets the cash to press ahead at Matthews Ridge

Some big resource investment houses have signaled their faith in Reunion Gold’s (RGD-V) Matthews Ridge manganese project in Guyana, and market participants took their cue.

A syndicate of underwriters led by BMO Capital Markets and Dundee Securities are buying 20 million Reunion common shares at a price of $1.75 per share, which will put nearly $35 million into Reunion’s coffers.

The underwriters can increase their stake by 15% or 3 million shares, up to 48 hours before the deal closes on May 2.

The faith of such big names in investment banking inspired faith from the market overall as evidenced by the company’s shares climbing 18% or 35¢ to $2.35 on a heavy volume of 2.8 million shares traded in Toronto on Mar. 29.

Reunion will plough the new capital into its Matthews Ridge project, with dollars earmarked for resource definition drilling, metallurgical studies and a pre-feasibility study.

Mathews Ridge sits 260-km northwest of the capital of Georgetown and was a producing mine for Union Carbide between 1962 and 1968. The mine turned out over 1.7 million tonnes of 37% manganese concentrate in that time period.

While the mine has remained shuttered since closing in the late 1960s, Reunion says some of the facilities at the site are recoverable.

But the site has more than some old milling equipment lying around as it also has three zones with non-compliant historic resources.

The first is Matthews Ridge with 2.6 million tonnes grading 33.4%% manganese concentrate, the second is Pipiani with 0.84 million tonnes grading 33.4% manganese and the last is the North Prospect with 0.1 million tonnes with an average grade of 33.4% manganese concentrate.

That estimate was done back in 1985 by GGMC and DPRK.

Reunion describes mineralization as being confined to Barama Group rocks, with the Matthews Ridge formation being of low-metamorphic grade pelitic sediments underlain by chlorite schist and after mafic volcanics of the tholeiitic affinity.

Mineralization occurs as black massive beds, manganiferous quartizites and quartizitic manganese beds. The bed are anywhere from 2 to 20 metres thick and the explored mineralized zone is 12 km long.

But perhaps the key to the story, and its ability to draw such a large investment, is the potential for easy and low cost development.

Being situated just 50-km from a port, having low infrastructure requirements and significant resource growth potential, Reunion says there is a real possibility of seeing development of a mine in a relatively short period of time.