The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
After purchasing 49 percent interest from Corvus, company seeks funds to meet goal of producing at least 3,000 ounces in 2014
WestMountain Gold Inc. has gained full ownership of the Terra project and now has its sights set on recovering 3,000 to 5,000 ounces of gold from this high-grade property over the coming summer season.
"I am pleased to announce that we now have 100 percent ownership of the Terra mine project. With this milestone accomplished, WMTN (WestMountain Gold) is now focused on raising operating capital to continue gold production at our high-grade gold mine in Alaska," WestMountain Gold President and CEO Greg Schifrin told potential investors May 5.
West Mountain, which entered a joint venture with Corvus Gold on the project late in 2010, had previously earned a 51 percent interest in the property. In February, the aspiring gold producer bought the 49 percent balance for US$1.8 million in cash and 200,000 WestMountain shares.
Over the past three years, WestMountain has been setting up and testing a two-ton-per-hour mill and gravity circuit to recover gold from the high-grade veins at this property located some 130 miles (210 kilometers) northwest of Anchorage.
Funding this activity in tight equity markets has put WestMountain Gold's balance sheet in the red, but the Idaho-based company is hoping to raise US$8 million to help balance the books and provide the capital needed to meet the company's goal of producing at least 150 ounces of gold per week during the 2014 field season at Terra.
"The construction and build up during the 2013 season has positioned the company to phase right into production with plans underway to open the mine and mill in April 2014," Schifrin said earlier.
Achieving goals
During 2013, WestMountain spent roughly US$2.2 million at the Terra project in 2013, of which US$1.6 million went to capital expenditures and US$600,000 to exploration.
One of the primary objectives of this investment was to upgrade the mill to a processing rate of one-to-two tons per hour; including the addition of a gold shaker table for free gold recovery, flotation cells and new mill buildings.
Upon completion of the upgrades, WestMountain tested the plant with 75 tons of material mined from the Ben and Fish veins. During this second test run of the mill, the company recovered 300 ounces, or about four ounces per ton, gold. This adds to the 75 ounces of gold recovered from a 23-ton bulk-sample processed in 2012.
"We are excited to have the continuity of gold doré production from our successful bulk sample tests and the associated cash flow that demonstrated the high-grade production potential of the Ben Vein and new efforts at the Fish Vein. We achieved all of our goals for 2013, including the year's highlight of producing gold doré from successful bulk sample tests of the Ben Vein and Fish Vein in the short summer season," said Schifrin.
Roughly 65 tons of the bulk sample was mined from three benches at Ben Vein, measuring 30 feet (9.1 meters) of vertical height and 90 feet (27.4 meters) along strike.
According to a technical report published in February 2013, the Ben Vein has an indicated resource of 428,000 metric tons averaging 12.2 grams per metric ton (168,000 ounces) gold and 23.1 g/t (318,000 ounces) silver. Geologic modeling of the drilled portion of Ben shows the high-grade vein is open-ended to the north and at depth.
The balance of the bulk sample was sourced from the Fish Vein, which is situated 4,900 feet (1,500 meters) northeast of the Ben Vein. Though there has yet to be a resource calculated for Fish, five holes drilled there in 2005 and 2012 returning assay intercepts of more than 128 g/t gold in quartz veins.
WestMountain also improved site infrastructure with the 80 percent completion of a 5,000-foot (1,500 meters) runway for larger aircraft that allows air transportation of equipment, fuel and supplies and a four-mile (6.5 kilometers) haulage road connecting the mill to the Ben Vein mine site.
"We accomplished all of the important infrastructure construction as well as preparation of the new underground portal site, optimally located below the main Ben Vein shoots, to be ready for the planned adit or tunnel development in 2014 for proposed bulk test production of an estimated 2,000 tons in the 2014 summer season," Schifrin said during a January update.
Seeking funds
WestMountain estimates it will cost US$3 million-US$3.5 million to continue the infrastructure projects started last year, while producing at least 3,000 ounces of gold at Terra during the 2014 summer season.
To fund this next stage of development of the high-grade gold mine, the company offered a private placement of up to US$8 million. For every dollar invested, WestMountain says US50 cents will be equity and US50 cents will be debt. The debt will be repaid from gold production in 2015 and 2016 yielding 15 percent interest, 5 percent in cash and 10 percent in stock. The company said it will collateralize the debt with the 49 percent interest in the mine acquired from Corvus Gold.
To provide incentive for investors, WestMountain has priced the equity portion below market value. Each share offered under the financing is priced at US80 cents with 125 percent warrant coverage at US25 cents, providing a net equity price of US49.5 cents per share upon execution of warrants by the investor.
"Based on our present understanding, this effort will be the last significant capital raise needed to operate and produce gold at current levels," Schifrin told potential investors.
The proceeds will be used for purchasing needed equipment; completion of the runway; improving the haul road between the Ben Vein and the mill; underground development at the Ben Vein; and operating capital needed to meet the company's goal of recovering at least 150 ounces of gold per week from mid-May through mid-October.
If successful at the current gold price, the company could realize US$3.75 million to US$6.5 million in gold sales from its small but high-grade gold mine in Southwest Alaska.
WestMountain also plans to continue to expand and confirm the resource through drilling as well as continue exploration of the other outcropping veins and potential bulk tonnage gold targets at Terra.
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.
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