Nerco takes position in Black Swan Gold

The private placement will give Nerco a 19% interest in Black Swan and one seat on the board. In addition, Nerco has an option to purchase 613,000 shares at the same price, providing another $450,000 to Black Swan’s treasury. That option can be exercised after Black Swan acquires Perth-based Polaris Pacific NL, which should be finalized in late July. Three million shares of Black Swan will be issued for six million shares of Polaris.

Stephen Semeniuk, vice-president research at Canarim Investment Corp., said that Nerco is a strong partner that will enable Black Swan to exploit other opportunities, both in Australia and Canada. He describes Black Swan as “one of the low risk mining stocks listed on the VSE.”

The move by Nerco is viewed as a way of expanding its activities in Australia which to date have been minimal. Black Swan has a 25% interest in the Gabanintha gold mine near Meekatharra, WA, which is operated by Dominion Mining, and a 50% interest in an area of influence extending some 75 miles past Meekatharra. “It’s not quite centred on the mine,” said Arthur Fisher, Black Swan’s president.

Fisher emphasized that Dominion and Black Swan don’t have the whole area because there are other producers in the region. “But we have an arrangement with Dominion whereby we will acquire properties in that region and explore them jointly. To date, the joint venture has made expenditures of about $1.1 million.”

“Several properties are advancing quite well and are beginning to have signs of being at least sources of mill feed for the Gabanintha mine.”

Gabanintha is producing at a rate of 50,000 oz per year but the joint venture is considering a $5-million mill expansion to 60,000 oz per year. “Before we do this we have to be sure the ore reserve is similarly expanded and we are just in the final processes of doing this,” he said.

For the year ended Mar 31, Black Swan reported cash flow from operations of $1.7 million or 9 cents per share and earnings of $761,000 or 4 cents per share. Current working capital is $819,000, excluding the private placement.

The attempted takeover of Pan Australian Mining and its Mt. Leyshon gold mine by Australian mining entrepreneur Robert Champion de Crespigny hasn’t escaped the attention of Semeniuk. Black Swan’s 60%-owned Merriland gold project in Queensland is just two miles from Mt. Leyshon which Australia’s Gold Gazette reports could be producing 200,000 oz gold per year in the future.

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