U.S. gold miner Battle Mountain Gold Co. (TSE), has expanded into Canada with a $40-million investment in a portfolio of properties controlled by Noramco Mining Corp. (TSE).
Battle Mountain’s investment will buy the company a 40% interest in Noramco’s most advanced gold projects, including the producing Golden Rose gold mine, north of North Bay, Ont.
The other properties are the Pickle Crow project near Pickle Lake, Ont., the Favourable Lake, Ont., gold project controlled by Noramco affiliate Zahavy Mines (ASE) and the Estrades polymetallic deposit in the Casa Berardi area of Quebec.
A sign of the cash shortage hampering the Canadian mining industry, the Battle Mountain deal provides Noramco with funds to finance its share of mine capital expenditures over the next several years.
Also, Battle Mountain is buying a 10% equity interest in Noramco from company insiders at a price of $6.50 per share. This, The Northern Miner estimates, will cost approximately $10 million. Warrants for another two million shares from treasury at a price of $5.62 for a period of two years are also included in the deal.
The $40 million will be divided amongst Noramco and its affiliates which hold the original interests in the property portfolio. Noramco will get $28.5 million, Zahavy $8 million and Golden Group Explorations (VSE) $2.1 million. Golden Group’s partner on the Estrades project, Golden Hope Resources (VSE), will receive $1.4 million.
According to Noramco, the Pickle Crow property could be producing gold next year, reaching full production in 1990 at 60,000 oz per year. Zahavy’s Favourable Lake project is a potential 35,000-oz-per-year mine in 1990. Golden Rose, which encountered milling problems earlier this year, was expected to produce 30,000 oz of gold in 1988.
Battle Mountain, which operates two mines in Nevada and the Pajingo gold mine in Australia, opened a Canadian office earlier this year. Orval Leigh, a well-known geologist, heads the Canadian division.
The Noramco investment is conditional on Battle Mountain completing its due diligence and receiving regulatory and board approval.
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