McFinley looks for partner as rights offering tabled

McFinley announced 12 months ago that it was ready to bulk sample 15,000 tons of material from the Bateman property where reserves stand at 890,000 tons of grade 0.21 oz gold per ton. The bulk test is necessary to determine the mineability of the gold mineralization.

But a lawsuit involving Dominion Bridge, which built McFinley’s 200-ton-per-day mill, and the failure of New York-based DRX Inc. to complete a $2.4-million private placement has depleted the company’s treasury. DRX holds an 8.7% stake in McFinley.

While McFinley recently announced a rights offering designed to raise $3.8 million for working capital and legal costs, the company will need an additional $2 million to complete the bulk sample, according to Chairman Bill Cummins.

“Anyone who is interested, is welcome to come and take a look at the property,” said Cummins who is hoping that the Dominion Bridge lawsuit can be settled out of court.

That would leave him with more money at his disposal to pay other outstanding bills. Under the terms of the rights offering, shareholders can subscribe for $100 in 4% convertible, redeemable debentures for every 278 common shares held on March 3.

The debentures have a term of five years and are redeemable by the company after Sept 30 on payment of a 10% premium. They are also convertible between Sept 30 and March 15, 1992 into common shares of the company at 83 common shares for each $100 of debentures.

Scheduled to expire March 27, the rights offering is expected to provide $2.27 million to finance the law suit and $1.07 million for working capital purposes.

McFinley was recently lent $697,200 from two institutional shareholders in England. The loan was arranged by Kleinwort Benson Securities which will receive a fee of $50,000.

Cummins is currently attempting to retain control of the McFinley board, after DRX Chairman Robert Clarke said he would seek a non confidence motion.

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