Commodity asset development company Mercator Gold (AIM: MCR, OTCQX:MTDGY) has placed 42.5 million shares to raise £425,000 to “satisfy institutional demand,” add and realise value from its existing portfolio of assets and “take advantage of opportunities as they arise".
Last month, Mercator said hat the drilling programme at its Copper Flat copper-gold-molybdenum-silver project in New Mexico had fulfilled its objectives and the company was looking to complete and independent reserve/resource update in May.
The seven hole programme for a total 5,041 feet over seven drill holes was concluded on 8 February 2010. The highlights that had not yet been reported included intersections of 44 metres at 0.46% copper, 0.024% molybdenum, 0.122 g/t (grammes per tonne) gold and 4.7 g/t silver and an intersection of 365.8 metres at 0.25% copper.
The May reserve/resource update will preceded by a final report on the pulp re-assay programme, which commenced in 2009 and concluded in April.
Copper Flat is a former producing mine with substantial infrastructure still in place. The Copper Flat deposit has historic reserves of 50.21 million short tons at an average grade of 0.45% copper, 0.1244 g/t gold, 2.053 g/t silver and 0.015% molybdenum, based on a cut-off grade of 0.23% copper.
On the basis of current historic reserves and assuming metal prices of US$3/lb copper, US$10/lb molybdenum, US$900/oz gold and US$13/oz silver, the Copper Flat project is estimated to have an NPV (net present value) of US$348 million and an IRR (internal rate of return) of 45%, assuming initial capital costs of US$115 million for the recommencement of production and a discount rate of 8%. The current price of copper is US$3.53/lb.