Royal Oak secures $14-million loan

New York bullion trader Sharps Pixley has agreed to provide up to $14 million in debt financing for Royal Oak Resources’ (TSE) $33- million acquisition of the Pamour (TSE) group of companies. The acquisition, which was expected to have closed Sept. 27, will give Royal Oak control over a group of companies which collectively produce about 200,000 oz. of gold annually. The Pamour group also has interests in several exploration and development properties both in Ontario and in the Northwest Territories.

As part of the Sharps Pixley financing deal, Royal Oak will have the option of borrowing up to an additional $4 million from another financial institution on a subordinated basis approved by Sharps Pixley.

The remaining financing is being raised by ScotiaMcLeod, BT Canada Securities and Richardson Greenshields through an equity issue of $16-20 million. Teck (TSE), which currently holds 16.5% of Royal Oak’s outstanding shares, will subscribe for 16.5% of the equity issue to maintain its pro rata holding.

If Australian owner Giant Resources sells the Pamour portfolio to Royal Oak as scheduled, Royal Oak will hold a 67.1% stake in Pamour, a 16.6% stake in Giant Yellowknife Mines (TSE), a debt of $18 million and control of all the companies in the Pamour Group including Pamorex Minerals (TSE).