I am posting a YRI release to AMC thread. Note the bolded part referring to AMC.....
Second quarter results
Yamana Resources Inc YRI
Shares issued 27,390,859 Oct 30 close $1.19
Mon 2 Nov 98 Company Review
Mr. Victor H. Bradley reviews the company
All references are to U.S. dollars except where stated otherwise.
FINANCIAL
In the midst of record lows in all aspects of metals markets and an even
more depressed state for the exploration sector of the international
minerals industry, Yamana Resources successfully completed an offering of 8
per cent senior secured convertible notes for gross proceeds of
$4.8-million during the quarter.
The notes were sold in principal amounts of $5,000, have a term of five
years, and each note is convertible into 9,090 common shares of Yamana at a
conversion price of 55 cents. Each note carries warrants to purchase 4,545
common shares at a price of 66 cents before July 31, 2001, but only in the
event that the corresponding notes are voluntarily converted into Yamana
common shares before July 17, 1999.
Under this offering, premiums of 10 per cent (first six months) or 5 per
cent (second six months) are payable in Yamana common shares for voluntary
conversion. Yamana has the right to force conversion if its common share
price exceeds certain levels during the five-year term. Yamana also has the
option to redeem the notes after five years either in cash at par or in
common shares at 120 per cent of par.
The equity component of the debentures consists of all outstanding notes
plus accrued interest. In accordance with Canadian generally accepted
accounting principles, this amount has been included in capital sources on
the balance sheet because of the holders' option to convert the debentures
into common shares and Yamana's option to repay the debentures and interest
by the issue of common shares in the company.
None of the securities have been or will be registered under the U.S.
Securities Act of 1933, and these securities may not be offered or sold in
the United States.
The bulk of the proceeds from this financing are dedicated to drilling
Yamana's silver properties in the Santa Cruz, Argentina, precious-metals
district and Yamana's copper properties in the Northern Porphyry Copper
belt of Chile. Exploration spending has been reduced to a "maintenance
only" level on all other Yamana projects.
For the six months ended Aug. 31, 1998, Yamana incurred a net loss of
$1,144,330, compared to $2,033,696 for the same period in 1997. The
decrease in loss reflects project standdowns, savings from sharp cutbacks
in overhead costs, and Yamana's continued stringent fiscal restraint.
All members of the then-current board of directors were re-elected at the
company's AGM in August. Shareholders passed a resolution, effective for
one year, which approved, in advance, the issuance by Yamana of its common
shares in one or more private placements which may exceed the Toronto Stock
Exchange 25 per cent rule. This gives Yamana flexibility in raising further
exploration money.
OPERATIONS
During the quarter, Yamana remained committed to cash conservation and
completed preparations for major drilling campaigns in Santa Cruz,
Argentina, and Chile's Northern Porphyry copper belt. Drilling was
suspended during this period and field work was limited to surface surveys
in the NPCB and equipment and property maintenance in Santa Cruz.
Yamana continued to optimize its land holdings in Argentina and Chile. In
Argentina, the addition of Argenta, a prospective, 95 sq km cateo adjoining
Bacon on the north, brings Yamana's Western Santa Cruz cateo holdings to
13, covering approximately 1,200 sq km. In Chile, Yamana's new Pan Am
claims cover 123 sq km, 30km southwest of El Penon, where Meridian Gold has
recently discovered a high-grade, low sulphidization quartz adularia-type,
epithermal gold and silver deposit with a production forecast of
approximately 310,000 gold equivalent ounces per year at a cash cost of
about $110 per ounce of gold. The Pan Am claims are on the same structural
zone and in a similar geologic setting to El Penon, covering a large area
of hydrothermally altered and silicified rhyolitic volcanics displaying
evidence of epithermal mineralization. Geologic mapping and geochemical
sampling are in progress on these claims. Elsewhere in Chile, Yamana
continued geochemical surveying on its NPCB properties. This work, combined
with the previous geological, geochemical and geophysical surveys, has
further defined drill targets and facilitated more refined sizing of
Yamana's land holdings.
Santa Cruz, Argentina
Yamana has recently launched a 10,000 metre drilling program in Western
Santa Cruz, where several announcements of precious metals discoveries have
generated a staking rush in the western sector of the Deseado Massif, the
Jurassic-age volcanic formation covering much of Santa Cruz Province. To
date, these discoveries have been anchored by Black Hawk Mining and Barrick
Gold's Manantial Espejo deposit, with a stated underground global resource
of 4.5 million tonnes of 4.92 g/t Au with 267 g/t Ag. In addition to
Yamana's Bacon and Lejano discoveries, promising drill hole intercepts in
the area have been announced by Abacus Minerals at La Manchuria (58.5
metres with 6.53 g/t Au and 22 g/t Ag); M.I.M. Holdings and Newcrest Mining
at Cerro Negro (80 metres of 3.9 g/t Au); and Minera Andes at El
Pluma/Cerro Saaverda (35 metres of 4.05 g/t Au and 617 g/t Ag).
These and other discoveries are all characterized by low
sulphidization-type, volcanogenic epithermal mineralization, with gold
occurring in a variety of settings, including some favouring low-grade,
bulk-tonnage targets. For example, at La Josefina, a mineralized vein
cluster is associated with auriferous siliceous sinters, and at Rio
Pinturas, gold is disseminated in siliceous tuff spatially related to a
rhyolite stock.
Yamana has made extensive preparations for its field operations in Santa
Cruz, including a three-property drilling program. Operational bases at
Lejano and Bema ranch are being reopened, Yamana's reverse circulation (RC)
drill unit is operating, two diamond core drills are on site, sample
facilities have been revamped, primary assayers have been selected, and the
technical team has been mobilized.
Yamana has also selected Micon International, a widely recognized,
Toronto-based, mineral industry consulting firm, to conduct independent
audits to render opinions as to the validity and quality of the exploration
properties in light of drilling program results; review Yamana's sampling
and analytical protocols; report on the resource/reserves at Bacon; and
review the competency and professionalism of Yamana's geologists and the
work they produce.
Bacon
Bacon covers a 9km-long quartz fault-vein system, cutting rhyolitic
stratigraphy, having high-level epithermal textures with associated
hydrothermal alteration of wall rock. This geologic setting is similar to
that at Tonopah, Nevada, a district which has produced 1.86 million ounces
of gold and 174 million ounces of silver. Similarly, the target at Bacon is
a deposit containing up to 100 million ounces of silver, with gold credits.
The Bacon structure lies within the regional scale Manantial Espejo
structural zone. First pass drilling early in 1998 involved 15 RC holes for
556 metres, testing downdip extensions of mineralized outcrops. Several
holes yielded bonanza-grade intercepts; the best is six metres true
thickness of 2,579 g/t Ag with 2.62 g/t Au. This scout drilling examined
only about 20 per cent of the length of the known Bacon structure.
Yamana's 1998-99 drilling campaign began in mid-September at Bacon with a
combined 1,500-metre diamond core and 2,300-metre RC drilling program. The
two objectives of the DDH program are pattern drilling on 25-metre centres
to begin quantification of the high-grade silver mineralization occurring
within a shoot identified by previous drilling beneath the discovery
outcrop; and in-fill drilling to determine continuity over the zone's 1km
strike. The RC drilling is being used to establish the strike and dip
parameters of the mineralization within the host structure.
The silver occurs as electrum and common sulphosalts which are normally
amenable to simple flotation recovery methods. The core drilling is also
intended to provide samples for metallurgical testing.
Lejano
Unlike Bacon, Lejano is a polymetallic deposit where high-grade silver
mineralization is contained within massive to semi-massive sulphides of
iron, lead, zinc and copper which impregnate and cement breccia within a
large fissure zone cutting a rhyolitic complex of domes and flows.
The geology of the Lejano area, including that of West Ciclon, 20
kilometres away, shows strong geological and mineralogical similarity to
the historic silver mining camp, Pachuca, Mexico, which produced 1.2
billion ounces of silver and 6.2 million ounces of gold.
Previous drilling of 44 RC holes for 1,846 metres established a 1km-long
mineralized zone around South Ridge, dipping to depths of greater than 100
metres. Most of this initial drilling penetrated only the gossan cap of the
underlying sulphides. This work indicates that the mineralized zone is 20
to 22 metres true width, and averages about 200 g/t Ag, 0.5 g/t Au, and 2.5
per cent Pb (lead). Within this zone is a high-grade core averaging 3.5
metres true width containing an average of 550 g/t Ag, 1.56 g/t Au, and 6.1
per cent Pb. Given the drilling results to date and all of the geological
factors, this deposit shows the potential to contain more than 100 million
ounces of silver.
The next round of drilling, being launched in late September, involves a
2,100-metre DDH program intended to determine the general parameters of the
South Ridge mineral deposit, including its strike and dip lengths, and to
examine its internal continuity. Yamana also plans a 2,200-metre RC program
in conjunction with the core drilling. Again, samples will be taken from
the HQ-sized core for metallurgical recovery testing.
Ciclon West
Reconnaissance RC drilling is planned on Ciclon West, where coincident,
strong surface geochemical and geophysical anomalies covering several
square kilometres establish an attractive drilling target. A geophysical
survey conducted in June identified what is interpreted to be a large
sulphide system beginning below the 80-metre thick zone of oxidation and
extending beyond its 200-metre search depth. Yamana geologists believe that
this potential sulphide system contains precious metals mineralization. A
1,500-metre RC program is scheduled to begin in early October and will
probe the target to depths of more than 250 metres.
Chile
Yamana's other major drilling exploration play is on its NPCB project in
Chile. This belt is the most prolific copper-producing district in the
world. A 7,000-metre reconnaissance drilling campaign is under way to
search for giant porphyry copper deposits concealed beneath thick gravel
plains. It involves testing 14 prospects by probing up to 250 metres into
underlying bed rock, using a contracted RC rig. These targets, identified
largely by a combination of remote sensing techniques including various
geochemical and geophysical surveys, are on six of Yamana's eight
properties. This initial drilling program should be completed by December
and, depending on results, may be supplemented with up to 3,000 metres of
follow-up drilling in the new year.
(c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch |
