Palladon lines up US$13-million financing

Vancouver – Palladon Ventures (PLL-V) has arranged a US$13-million financing for its acquisition of the past producing Comstock-Mountain Lion iron mine in southwestern Utah.

The 5% convertible notes, having a five year term, will be placed through Luxor Capital with a conversion price of $0.90 per share. The company will also issue 7.8-million warrants exercisable for two years at $0.99 per share.

Palladon and joint venture partner Western Utah Copper (WUCC) are acquiring the project for US$10 million from Iron Ore Mines, a company affiliated with now bankrupt Geneva Steel that previously operated the mine. The purchase agreement has been approved by the State’s bankruptcy court.

The Comstock-Mountain Lion open pit iron mine operated for several decades until 1995 when operations ceased due to weakening demand and steel prices. Remaining ore reserves after closure of the mine, as estimated by Geneva, are 25 million tonnes grading 47.1% iron. There are several low-grade stockpiles that also remain and are estimated to contain about 12.5 million tonnes averaging 42% iron.

Also included in the purchase agreement is the nearby Rex deposit which never saw production. Rex was extensively drilled from the late 1940s until the early 1960s with over 200 core holes totaling 60,000 metres. A 1991 study, conducted by consulting engineers Pincock, Allen and Holt, determined an open pittable resource of 89 million tonnes of 69% copper at Rex assuming a 6-to-1 stripping ratio. The calculations pre-date National Instrument 43-101.

Palladon, with 65% interest in the joint venture, and WUCC, holding the remaining 35%, have undertaken a complete review of past work programs and studies on the project. A revised preliminary scoping study is underway to satisfy NI 43-101 requirements.

With 24.1 million shares outstanding, Palladon posts a market capitalization of $19 million given its recent trading level of 80 per share. The issue is trading at about the midpoint of its 52-week range of $0.30-$1.27.


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