Canadian Zinc to up stakes in Fiji mine

May 08, 2009 04:55:09 PM

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Vatukoula Gold Mines’ (VGM) newest major investor Canadian Zinc Corporation has entered into a C$2.16 million (F$3.9 million) subscription agreement for additional shares in VGM in a move that will reinforce its position as a significant shareholder. 

This deal – awaiting shareholders’ approval in an extraordinary general meeting planned to be held “within the next 30 days” – follows on from Canadian Zinc’s major announcement last month that it had bought 18.25 percent of VGM.  

“Upon completion of the subscription, Canadian Zinc will hold a total of 547,669,022 ordinary shares or approximately 20.01 percent of the issued share capital of VGM,” Canadian Zinc said yesterday in a statement. 

“Completion of the subscription is subject to approval of VGM shareholders at an Extraordinary General Meeting, which is planned to be held within the next 30 days, to confer authority under the United Kingdom Companies Act 1985 to issue the subscription shares without the requirement to first offer them on a pre-emptive basis to existing shareholders.”

This turn of events is expected to see Vatukoula ownership lean primarily towards Canadian interests, and strengthens its links to Canadian mining entrepreneur and merchant banker Walter Berukoff, who has reportedly been at odds with VGM management regarding capital raising options.  

Berukoff resides in Vancouver, home to Canadian Zinc’s headquarters and in terms of VGM shareholding, this latest deal is expected to boost the stakes currently held by Viso Gero Global Inc in VGM. 

Viso Gero is a subsidiary of Red Lion Management Ltd, merchant banking company owned by Berukoff and has been given the right until January 9, 2010, to purchase part of Canadian Zinc’s interests in VGM.
“Canadian Zinc has granted Viso Gero Global Inc., a subsidiary of Red Lion Management Ltd, the option until January 2010 to purchase up to 200 million of its VGM shares,” the Canadian Zinc statement said.

“Should Viso Gero exercise the Viso Gero Call Option to purchase up to 200 million shares of VGM from Canadian Zinc, then, under the terms of the Subscription Agreement, Canadian Zinc will be entitled to subscribe for up to 250 million additional VGM shares so that the total percentage shareholding held by Canadian Zinc remains at 20.01 percent.”

While there has been turbulence at shareholder level, the new shareholders are sure about what they want to do in Vatukoula. 

“The Board of Canadian Zinc is always looking to increase the value of the company on behalf of its shareholders and the company recognizes an opportunity to support VGM, and in turn benefit its shareholders, by assisting in optimizing operations to enable the mine to further operate and tap into the great future potential that still remains in the Vatukoula Gold Mine,” Canadian Zinc Chief Operating Officer Alan Taylor told FijiLive. 

“Vatukoula Mine needs capital funding to upgrade and optimize operations along with continuing with exploration to define further reserves and resources.  The plan is to raise such funding in order to initiate and carry out a long term mine plan that will carry a viable operation well into the future,” Taylor said. 

VGM has 100 percent ownership in the gold mine and exploration licenses in Vatukoula.