Rio buys 9.9% of El Condor for its stake in Kemess project

A recently arranged private placement of 1.07 million common shares priced at $2.80 each gives Rio Algom (TSE) an initial foothold in El Condor Resources (VSE) and its Kemess gold-copper project in north-central British Columbia.

The placement includes warrants to purchase an additional 535,000 shares of the company at $3 per share for one year.

Earlier this year, Rio Algom negotiated a share purchase option with St. Philips Resources (VSE), El Condor’s 40% partner on the South Kemess property. The option gives Rio Algom the right to buy 3.8 million treasury shares and 1.2 million existing shares of St. Philips on a graduated price scale. If fully exercised, Rio would own about 48% of St. Philips’ 10.33 million shares (fully diluted).

The placement with El Condor gives Rio a 9.9% interest in the company and includes a clause that allows Rio to maintain the interest at that level for a 5-year period.

In addition to owning a 60% interest in the South Kemess property, El Condor holds a 100% interest in the adjacent North Kemess property. Drilling on the two properties last year indicated preliminary reserves of 78 million tons grading 0.3% copper and 0.018 oz. gold per ton on the South Kemess and 84 million tons grading 0.16% copper and 0.010 oz. gold on the North Kemess.

Drilling as well as further IP surveys are now under way on both the Kemess North and South properties. A third drill rig is scheduled to start work on completion of the geophysical work.