The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Green light allows Redcorp to sell B.C. project's gold for C$90 million and secure C$110 million in loans; money will pay for mine's development
Redcorp Ventures Ltd. and subsidiary Redfern Resources Ltd. said holders of more than the required two-thirds of the company's 13 percent senior secured notes have agreed to certain amendments to the note terms between the junior mining company and CIBC Mellon Trust Co.
The proposed amendments will give Redcorp access to about $200 million in capital to be used to develop the Tulsequah Chief Mine Project to commercial production.
Gold Wheaton Gold Corp. will provide $90 million by making an upfront purchase of gold production anticipated from mine project.
Another C$110 million will be provided through two separate bank loans; a C$85 million loan from HSBC Bank Canada, and $25 million from MRI Trading AG.
Holders of the notes have asked for a 2.5 percent net smelter return royalty on production from the polymetallic project, additional interest payments and about 701 warrants per note in exchange for their consent.
Construction costs up nearly 50 percent
Estimated construction costs, meanwhile, have soared for Tulsequah and is now projected to total about C$297.1 million, up C$95.6 million or nearly 50 percent, from costs estimates in a 2007 feasibility study completed for the mine project. The increase is attributed largely to excavation costs for mine roads and bridges and anticipated site and tailings excavation costs.
After taking into account the increased capital cost and the effects of the gold sale agreement with Gold Wheaton, Redcorp calculated the net present value of Tulsequah, as of June 12, at C$204 million; no updates are currently available that include the impact of note holders' consent fees.
"The gold sale agreement is a critical step in the path allowing the company to bring the Tulsequah Chief Mine into production and is a key part of unlocking the potential of the Tulsequah Property. The revised capital estimate has been carefully and conservatively prepared. We are confident that the mine can be brought into production within the cost and timeline projected," said Terry Chandler, president and CEO of Redcorp.
Tunnel improvements begin
Ampex Mining has begun rehabilitating historic tunnels at the Tulsequah Chief mine. The underground contractors, based in Whitehorse, Yukon, are removing old air pipes and tracks from the adits in preparation for modern mining.
Redfern said it will have larger air pipes installed and use trackless equipment, which began arriving to the mine site this summer, when they begin operations at the mine.
In addition to the mining equipment, barge have delivered two of the eight generators needed to power the mine and supplies for the water treatment plant.
The company reports that construction crews have about one kilometer, or 0.6 miles, remaining to complete of the 20-kilometer, or 12-mile, road between the mine site and the Taku river landing where air cushion barges will transport mineral concentrate from the mine down the Taku River on its way to Juneau and then on to the Skagway Ore Terminal.
Once construction crews have completed the road and setup of the water treatment plant, they will begin moving waste rock from the historic operation to a new disposal site, part of efforts to clean up the site.
Air cushion barge
Redfern still needs to acquire Alaska permits to operate an air cushion barge on the Taku River in Alaska. A recent change in tow vehicles, from the experimental "Amphitrac" vehicle to a combination of more conventional tracked and rubber-tired low-ground-pressure-vehicle, required the company to re-apply for permits in August.
Redfern also reported that frame and hull fabrication of the air cushion barge is 60 percent complete.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
Reader Comments(0)