Sikaman raising Bogosu funds through public offering

The company reports investment dealer Midland Doherty has agreed to underwrite a minimum of $6,060,000.

Sikaman has two gold projects near the production stage, the open- pit, 100,000-oz-per-year Bogosu operation in Ghana in which the company has a 40.5% interest, and a wholly-owned tailings recovery operation at Snow Lake, Man. Whereas the Bogosu project may not be in commercial production until April, 1990, the tailings operation could be started up during the latt er part of this year.

The securities being offered are common shares or units comprising one $1,000 principal amount 10% convertible debenture and 20 gold purchase warrants. Price of the shares is $3 each and of the units, $1,010 each.

The debenture is convertible into Sikaman common shares at $3.50 per share from March 31, 1990, to March 31, 1994. The interest rate on the debenture is 10%; the 20 gold purchase warrants entitle the holder to purchase one ounce of gold at $450(US) per oz from March 31, 1990, to March 31, 1994. Project partners

Sikaman’s partners at Bogosu are Billiton B.V. (40.5% interest) of The Netherlands, the government of Ghana (10%) and International Finance Corp. (9%), an agency of the World Bank.

At Sikaman’s recent annual meeting, President A. T. Griffis said about $10 million(US) has been spent to date on Bogosu exploration work and a feasibility study. Total cost to bring the mining operation into production is estimated to be $77.5 million.

Proven reserves of about five million tons grading 0.12 oz gold per ton and probable reserves of 3 million tons grading 0.1 oz have been outlined. Griffis said the company is negotiating to purchase the rights to more territory, in particular a land holding to the south of the Bogosu concession containing an estimated four million tons of mineralization.

It is estimated production costs at Bogosu will average $147(US) per oz during the first three years of operation, and $181 during the first eight years. The mining operations will focus on the open pit targets, Griffis said; proving up the deeper underground reserves is not an immediate concern. Arsenical tailings

In Manitoba, Sikaman has ac- quired the right to treat a gold concentrate tailings deposit containing about 274,000 tons and grading 0.377 oz. Owner of the tailings, High River Gold Mines (formerly Nor-Acme Gold Mines), retains a 5% net smelter royalty. The arsenical tailings were produced by cyanidation of a flotation concentrate from a previous underground mining operation.

Sikaman is currently testing a nitric acid oxidation (arseno) process at a pilot plant. The arseno process acts to oxidize the sulphides prior to cyanidation and produces a stable ferric arsenate suitable for redisposal as tailings. Griffis says testing to date has indicated a gold recovery rate greater than 90% is achievable.

About 47,000 oz gold per year are expected to be recovered during the project’s 2-year life, at an average operating cost of $97 per oz. Capital cost of the project is estimated to be $12 million.

Not as advanced as the above two projects are Sikaman’s exploration plays in the Northwest Territories, Mali-West Africa and western Australia.

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