The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
WestMountain restructures debt to resume high-grade gold mining in Alaska
WestMountain Gold Inc. has cut a debt-restructuring and financing deal that will allow it to continue to mine for high-grade gold at its Terra Project located at the southwestern end of the Alaska Range.
"We are pleased to announce that we are commencing operations at the Terra Project for the 2015 mining season, and we look forward to building on our success from last year's production," said WestMountain CEO Greg Schifrin.
Over the previous three seasons, WestMountain has ratcheted up production at a small pilot mill on the Southwest Alaska gold property, recovering roughly 1,350 ounces of gold and 550 oz of silver from about 500 short tons of ore during 2014.
Most of this high-grade ore came from the Ben Vein, which has roughly 471,800 short tons of ore averaging 0.36 oz/t (168,000 oz) gold and 0.67 oz/t (318,000 oz) silver, according to a 2013 technical report on Terra.
The 2014 pilot production resulted in more than a 500 percent increase in production from the previous year. Based on the preliminary numbers, roughly 2.1 ounces of gold per short ton was recovered from the ore mined from the Ben Vein last year.
Schifrin said, "The amount of gold doré recovered from the pilot mill processing further validates that a low-cost, underground mine operation is feasible with continued assessment and development."
Loan extension
To realize its expectations, however, WestMountain needed an extension on current loans and a grubstake for 2015. Thus, the company cut a deal with BOCO Investment LLC to restructure some US$6 million owed to the investment firm.
Upon the May 26 signing of the deal, WestMountain is no longer in default on any of its outstanding debt with BOCO, and payments have been spread out over the next three years at an annual interest rate of 8 percent.
BOCO also agreed to convert all of its accrued interest and a portion of its principal into WestMountain shares. According to U.S. Security and Exchange Commission filings on the transaction, BOCO and related parties now own 47.5 million shares of WestMountain Gold, or about 67.3 percent of the mining company's outstanding shares.
As part of the arrangement, BOCO also agreed to exercise 6.9 million warrants - executed on May 27 - providing WestMountain with US$264,331 paid to the company. BOCO also provided an additional US$150,000 credit facility for Terra project expenditures.
With its debt load lightened and some money to work with, WestMountain is ready to open up the Terra camp for the 2015 mining season.
"The recent debt restructuring and infusion of new capital allows us to immediately start operations, and provides a path that allows us to pay our debt as we continue to grow the company and shareholder value over the next several years," Schifrin explained.
Continued growth
Since setting up the pilot plant at Terra in 2012, WestMountain has incrementally increased throughput and gold production, a practice the company plans to continue.
Schifrin said WestMountain is "planning for another year of substantial pilot production growth for the 2015 mining season. Terra has substantial gold along strike and at depth based on the drill data and exploration work conducted, which further confirms our expectations for growth at the project."
After initial set-up, the company recovered 75 oz of gold and 23 oz of silver from 23 tons of material milled during the first year. In 2013, the mill recovered 250 oz. of gold from 75 tons of the high-grade vein material, or about four ounces per ton. The largest leap in production, however, came in 2014, resulting in the 1,350 oz of gold from 500 tons of ore milled.
Despite the increased mill throughput in 2014, WestMountain reported, "There were many down days required during the 2014 season for mill retrofit and repair."
The company spent most of last June repairing winter damage and rebuilding worn out mill equipment. The mill was down again in July for repairs before operations smoothed during the final two months of summer operations. During the 67 days of trouble-free operation, the mill processed ore at a rate of about eight tons per day.
In addition to more trouble-free days, WestMountain hopes to increase the roughly one-ton-per-hour capacity of the mill. To accomplish this, the company acquired a five-ton-per-hour jaw crusher and grind mill last summer. The crusher was installed in September and the grind mill is set for installation this year.
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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