Western Standard buys Freegold’s Almaden gold project

Freegold Ventures (ITF-T) is easing some debt pressures by selling its Almaden gold project in western Idaho to Western Standard Metals (WSM-V) for cash, shares and warrants.

To acquire the project, Western Standard will issue 4 million shares to Freegold and another 1 million shares to Tiomin Resources (TIO-T), which holds a secondary secured debt of US$2.3 million over the assets of Freegold.

Western Standard will also pay US$2.9 million and 500,000 warrants convertible at C30¢ a share to Freegold’s secured bridge debt holder.

Tiomin has already converted about two-thirds of its US$2.3 million debt to 16.7 million Freegold shares. It now holds about 19.9% of Freegold’s outstanding shares. The 1 million shares that Western Standard is issuing to Tiomin reduces Freegold’s debt balnce to about US$855,000. Freegold must repay this new balance within two years (plus 6% interest).

Tiomin also now has the right to nominate a person to Freegold’s board of directors.

In a short amount of time, Western Standard expects to start a new exploration program at Almaden, located in a rural area close to hydro-electric power lines. In about one month, Western Standard plans to release an updated technical report with a new resource estimate that will be used in a feasibility study.

An additional 17,000 metres worth of drilling to resources will be added to the resource estimate.

At the moment, the deposit has indicated resources of 22.5 million tonnes grading 0.72 gram gold per tonne for 520,000 oz. gold and another 18.1 million tonnes grading 0.62 gram gold per tonne for 361,000 oz. under the inferred category.

Western Standard will get straight to work on drilling the extension of near surface mineralization found to the north and to the south of the Almaden deposit. The program will also test for deeper high-grade mineralization.

The company will also do some metallurgical test work for a feasibility study that will determine the most economical potential production scenario.

The low-sulphidation epithermal gold deposit was drilled extensively between 1978 and 1992. Freegold acquired it in 1995 and completed a feasibility study in 1997 that showed the economics of a 100,000 oz. per year operation with a five-year mine life.