By transferring to Labyrinth Resources (VSE) its option on properties in Venezuela’s Lo Increible gold belt, parent Bema Gold (TSE) has invigorated the 76%-owned junior.
In return for transferring various property interests, Bema will receive 1.3 million shares of Labyrinth as well as US$1.7 million to cover its costs to date.
It will also receive options to buy an additional one million Labyrinth shares at $1 per share in the first year, $1.50 in the second and $2.50 in the third. Bema retains a 2% net smelter return on the properties. Labyrinth must also advance Bema US$2.5 million by Nov. 1 to acquire a loan the company made to the property-vendors of one of two blocks of ground under option.
After the transfer from Bema, Labyrinth can acquire 51% of a Venezuelan mining company which holds exploration rights to five properties comprising about 7,500 hectares in or near Lo Increible.
To earn the interest, Labyrinth must pay US$3.9 million (US$374,000 of which has been paid), lend US$2.5 million to the vendors (done by Bema), fund ongoing acquisition costs of about US$3 million (US$775,000 has been paid by Bema to date) and spend at least $2.2 million on the properties within two years to produce a feasibility study.
On completion of the feasibility, and in order to retain the 51% interest, Labyrinth must forgive the US$2.5-million loan and pay up to US$1.5 million, plus make a further payment equal to the net present value of a 2% interest in the project.
If Labyrinth withdraws from the project prior to completion of a feasibility, the vendors must repay the US$2.5 million loan plus accrued interest. The second option agreement includes the right to earn a 70% interest in a new company which has rights to the Lomec property. It can do so by spending US$3 million over five years and issuing 200,000 shares over 18 months. The Lomec ground covers about 1,500 hectares within the Increible gold belt where an estimated 180 million grams gold have been produced over the past 100 years.
The gold belt measures about 8x1x1.5 km and has some 86 hardrock workings exposed along its extent. Fifty of the workings are being mined and the company notes that little exploration work has been done in the past; miners have simply moved from one near-surface zone to another. Gold mineralization varies from strongly mineralized shear zones to gold-bearing stockworks and disseminations.
Exploration expenditures on the two Increible blocks are expected to total about $700,000 this year. Labyrinth has arranged just over $5 million in financing to fund its participation.
Bema agreed to buy five million units at 40 cents each through a private placement. The units include one share and one warrant to buy an additional share at $1 in the first year and $1.10 in the second.
A further 5.3 million units will be bought by Yorkton Securities through a brokered private placement at 65 cents per unit. The units include one share and one warrant with two warrants giving the holder the right to buy an additional share at 90 cents for two years.
On completion of the placements and prior to the exercise of any warrants, Labyrinth will have about 12.4 million shares outstanding with Bema holding about 6.7 million of the total.
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