ay For Gold Juniors To Raise Capital?

(Kitco News) - The gold junior mining landscape has been a rough one of late, with a lack of capital and lower gold prices extinguishing companies around the world.

With mining companies slashing costs and investor confidence rattled in the sector, capital has been hard to come by.

One junior miner is going a different route for generating capital, something you tend to see more with large-scale miners, investment companies and banks -- selling gold forward.

Lake Victoria Mining Co. (OTCBB:http://www.kitco.com/finance/stocks/details.html?j1_module=stockDetail&j1_symbol=LVCA&j1_region=US">LVCA) is selling forward part of its gold at the company’s Kinyambwiga Gold Project, located in Tanzania, in order to raise capital.

“This may be a new way – but not really new as it’s been done for years with bigger companies and banks – to fund a junior company without diluting all their stock,” said David Kaleniuk, president and chief executive officer of Lake Victoria Mining. “It opens up for gold enthusiasts the opportunity to participate in something that only the big guys, or companies, are able to participate in.”

Kaleniuk expects Kinyambwiga to produce between 1,500 and 2,000 ounces of gold monthly at all-in costs of roughly $600. Construction is under way and first pour is expected in about six months.

Kinyambwiga has a conceptual resource estimate, not the standard NI 43-101 that is commonplace in the mining industry, which Kaleniuk noted was a little frowned upon.

“With the work that we’ve done on the property, which is limited, we’ve only drilled about 70 meters as the deepest hole,” said Kaleniuk. “The internal calculation is about 45,000 ounces to start with.”

Once the company begins pouring its dore onsite in six months, they will ship the product to a refinery.

“We’d pour dore onsite and it would go from there to refinery, either Rand or Switzerland or another. We’re in talks with in Turkey, so it hasn’t been pinpointed which one, but it will be going to a refinery,” said Kaleniuk.

As of now, Lake Victoria Mining is filling orders for delivery 10 months out. Should the company not be able to meet its delivery time, there are compensatory stipulations in their agreement with the customer.

“In the agreement, if we’re not on time with the delivery, we give ourselves a year that there’s no possible way we not deliver it,” said Kaleniuk. “If it’s a year beyond delivery, then the only way we satisfy it is conversion to our common stock.”

Kaleniuk pointed out this is a necessary clause and is not worried about the company’s capability to meet its deliveries.

“We wouldn’t be pursuing this method if we weren’t planning on delivering gold,” he said.

By Alex Létourneau of Kitco News [email protected]
Follow Alex Letourneau at @alex_letourneau

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.