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Canada Gold has budgeted an approximately $9 million capital expenditure to build the facility to 300 ton/day capacity. For an additional $2 million, Canada Gold projects the capacity can be upgraded to 600 ton/day.
Canada Gold has arranged a stock swap financing with Grafton Resources Investment Trust ("Grafton") to cover the capital expenditures. The arrangement is as follows:
The assets of CanOrePro consist of a 100% ownership in a fully registered Peruvian corporation, Procesadora CanOrePro S.A., Canadian Ore Processors is also the beneficial owner of 231,623 shares of Grafton Resource Investments ("Grafton"; a 5 year closed end fund), originally received in exchange for 15,400,000 shares of CanOrePro. The published per share net asset value of the Grafton fund as at July 31, 2009 was US$40.69, representing a value of US$9,424,740, that is recorded on CanOrePro’s July 31, 2009 financial statements. To facilitate the acquisition, Canada Gold, CanOrePro and Grafton have agreed to cancel the 15,400,000 shares issued to Grafton by CanOrePro in January 2009 and re-issue non-voting shares to Grafton representing a 50% interest in CanOrePro. Accordingly, through their equal ownership of CanOrePro, Canada Gold and Grafton will indirectly hold a 50% equity interest in Procesadora CanOrePro. Subsequently, Grafton has granted Canada Gold a 3 year option to purchase Grafton’s 50% equity interest in CanOrePro for US$10,000,000. Canada Gold can pay the purchase price in cash or by the issuance of shares of Canada Gold at a floor price of US$0.55 per share or the preceding 30 day average trading price, whichever is higher.
Canada Gold also has significant holdings in Animas Resources Inc.
