Here is a interesting report from Stock Watch on Wednesday's volume:
Harry Barr's INTERNATIONAL FREEGOLD MINERAL DEVELOPMENT was also active,
down $0.03 at $0.67 on 767,000 shares. Today's volume included two block
trades. Nesbitt Burns bought 250,000 shares at $0.70 from Yorkton
Securities, while CIBC Wood Gundy Securities bought 230,000 shares at the
same price, also from Yorkton.
Freegold has two main gold projects on the go, the Golden Summit project
near Fairbanks, Alaska, a joint venture with BARRICK GOLD, and the Almaden
project in Idaho. Although the company raised $5-million in a private
placement of special warrants priced at $1 12 months ago, it needs more
money now. In late February, Freegold engaged Marleau Lemire Securities to
sell up to 7.1-million special warrants at $0.70 on a best efforts basis.
Each unit was proposed to consist of one share and a half warrant, with
each full warrant exercisable at $0.95 for a year. Nothing more was heard
for several months, but two weeks ago Barrick popped up, intending to
invest up to $10-million in several stages. The stock was halted for a week
pending the Barrick news, and resumed trading on May 20. With luck, this
Nesbitt buying - Barrick investing combination will do better than their
1994 common interest, called Bre-X, did.
Freegold's Barrick financing has several different parts. The major
proposes to invest $750,000 in the Marleau Lemire special warrant private
placement, and an identical amount in special warrants which also carry
property right warrants. In the third stage, Barrick may buy 1.2-million
shares at $1.25 by next March in a 1998 property warrant deal, 1.7-million
shares at $1.75 by March 1999 in a 1999 property warrant deal, and
1.2-million shares at $2.50 the following year in a 2000 property warrant
deal. If Barrick invests the full $10-million, it will have the option to
earn a 51 per-cent interest in the Golden Summit project. If it ultimately
decides to take the property to production, it will get a further 19
per-cent interest, taking its total stake to 70 per-cent. Freegold and
Barrick officials plan to meet soon to discuss this year's Golden Summit
budget and make final plans for the upcoming work program.
Earlier this week, the Vancouver Stock Exchange gave final approval to
Freegold's agreement to acquire a 93 per-cent interest in the Golden Summit
project. The seller, Fairbanks Exploration, keeps a seven per-cent carried
interest and a two per-cent net smelter return. Freegold's payment for the
property will total a maximum of 600,000 shares. It will start off by
paying 100,000 shares, then issue a half million more shares in tranches of
100,000 shares depending on expenditures on the property.
While this year's field program is under review with Barrick, several weeks
ago Freegold planned a minimum budget of US$1.1-million. Diamond drilling
begins in a week or two at the Cleary Hill mine, a former high grade modest
gold producer on Summit Hill's western portion, to test for a continuation
of ore shoots at length.
It is unclear at this point how much Barrick's initial $750,000 commitment
will help towards closing the $5-million special warrant financing. In late
February, Mr Barr expected Marleau Lemire to close the private placement
during March. The company plans to receive the money without waiting for
any sort of escrow release, although it hopes to get a prospectus receipted
within four months, clearing the shares for resale to the retail public.
Freegold intends to use the proceeds of the financing on the Golden Summit
and Almaden projects, and for working capital.
On the Almaden deposit, 75 miles northwest of Boise, Freegold hopes to
complete a feasibility study sometime this summer. The company is earning a
60 per-cent interest in this property from ICAN MINERALS, providing the
study is completed by the end of the year. It holds a reported reserve of
one million ounces of gold, based on 45.8-million tons grading 0.022
ounces. While the project appears to be a low grade bulk mining situation,
Freegold touts an unusually low waste-to-ore stripping ratio of 0.35 to
one, low cyanide consumption, a well developed infrastructure and a
location which will not excite environmentalists too much. He hopes this
combined factors will make the heap-leach project viable.
Freegold has not received much press in the past few years, but it has
attracted the attention of the newsletter crowd. Long-time follower Jay
Taylor, editor of Gold & Gold Stocks, issued another buy in early January,
noting the stock closed 1996 weak at US$0.54, which he attributed to
tax-loss selling. Always a good one with numbers, Mr Taylor pegged
Freegold's potential stock price at US$8.20, based on the Almaden project
alone. He figured the project should have 70 per-cent recoveries, leading
to 63,000 ounces per year over ten years. With a US$400-an-ounce for gold,
he figured that operating profits should be US$11.6-million for Almaden,
with Freegold's 60 per-cent share worth US$7-million, or US$0.82 a share.
Multiplying this EBITDA by ten times, he came up with the US$8.20 stock
price target. Two years ago, Mr Taylor said that Freegold, then $0.66, had
excellent chances to seek its stock rise 500 to 5000 per-cent. This would
presumably see the stock at $3.30 to $33. Al Budai of Buy Low, Sell High
also took a liking to Freegold in his December issue, when he expected a
substantial price increase over the first half of 1997. |
