Great Lakes buys into Grouse Creek

A preliminary prospectus for an offering worth up to $35 million has been filed by Great Lakes Minerals (TSE).

The company will use US$6.8 million to buy a 20% undivided interest in the Grouse Creek gold-silver project in Idaho owned by Hecla Mining (NYSE). Another US$16.7 million will be used to finance Great Lakes’ pro-rata share of capital expenditures, used to bring the project into production. Also, the company has an option, prior to production, to buy an additional 10% undivided interest at a rate of US$277,000 for each additional 1% interest.

An increased share in the project will subsequently increase its pro-rata share of capital expenditures.

Production from Grouse Creek is expected to start in the fourth quarter of 1994, with cash production costs to Great Lakes estimated to be US$160-170 per oz. after silver credits.

Proven and probable diluted reserves are 1 million oz. gold equivalent. Exploration is continuing.

Underwriters Wood Gundy, Gordon Capital, Burns Fry, Levesque Beaubien Geoffrion and Midland Walwyn will sell the common shares until the close of the issue, expected in early February.

Meanwhile, mapping, sampling and trenching on Great Lakes’ Lluvia de Oro gold project in Mexico’s Sonora state will be followed by drilling next month. The company can acquire the property, subject to a 3% net smelter return royalty payable to Repadre Capital, for $250,000.