Redstone Resources (TSE), an affiliate of royalty specialist Franco- Nevada Mining (TSE), recently agreed to acquire a 2% gross royalty interest in the Midwest uranium deposit in Saskatchewan for $3 million. Containing a preliminary reserve estimate of 56 million lb. of uranium oxide, the deposit is being developed by partners Denison Mines (45%), Bow Valley Industries (20%), Uranerz Exploration and Mining (20%) and PNCE Exploration (15%).
With an average grade of 1.25% uranium oxide per lb., the deposit is considered relatively high grade in comparison to the Elliot Lake operations of Denison Mines and Rio Algom (TSE) where grades run at about 0.1%.
As a feasibility study is under way to determine the minability of the Midway deposit, Redstone predicts that it could receive, pending a positive production decision later this year, royalty revenues from mine output as early as 1993.
To finance the royalty acquisition, Redstone has made arrangements for a private placement of 1.8 million shares at $2 each. Pending regulatory approval, Gordon Capital of Toronto has agreed to act as agent for 800,000 shares, while Franco-Nevada will increase its stake in Redstone to 40% from 37% by subscribing for 1.06 million shares.
Redstone’s other chief asset is a 1% interest in the Falconbridge Dominicana C por A nickel operation in the Dominican Republic, which last year produced 69 million lb. of ferronickel.
It also holds the 37-million-ton, grading 3.29% Coates copper deposit in the Northwest Territories.
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