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Alexis Minerals to raise $60m in project debt for Snow Lake Gold mine in Manitoba

Published: 07:11 01 Oct 2010 AEST

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Alexis Minerals (TSX:AMC) (OTCQX:AXSMF) has signed a letter to secure project financing of up to $60 million from Legend Securities for the company's Snow Lake Gold mine in Manitoba.

It has been proposed that the project financing, which will have a five year term, will be divided into two tranches: $45 Million for anticipated capital costs to develop and refurbish the Snow Lake mine during the 12 month period following a positive production decision, and an additional $15 million working capital facility.

Alexis will re-pay the debt in quarterly payments from revenues of gold production at Snow Lake. The first tranche of the facility is expected to be available during the fourth quarter this year, and is timed to allow the start of mine construction and development in January 2011.

There are no associated warrants, options or other equity involvement, the company said.

The completion of the facility is still subject to closing conditions, including the completion of due diligence and the Snow Lake feasibility study, which is expected to be done early next month.

Alexis acquired a 100% interest in the Snow Lake Mine in April this year and completed an independent preliminary assessment (PA) of the deposits in March.

In the PA, Golder Associates estimated that Snow Lake could produce a total of approximately 423,000 ounces of gold over an estimated six year project life, at a life of mine total cash cost of approximately US$544 per ounce. The mine also has the potential to produce over 90,000 ounces of gold per year.

The initial capital cost was estimated to be approximately CDN$33.8 million. Golder projected the Snow Lake mine to generate a 191% IRR and approximately CDN$163.8 million of accumulated cash flow on a before tax basis.

Alexis has completed over 18,000 metres of surface diamond drilling at the Snow Lake project during 2010, in a proposed program of 35,000 metres. Two drills are currently active.

The company identified significant gold mineralization in a potential on-strike extension to the Main mine on the property, and is currently drilling this zone to test the east and down-plunge of the discovery area to determine if a third ore lens occurs on strike of the Main mine.

Alexis has also identified two new high-grade gold zones, which contain mineralization that the company believes is similar in character to that of the Main mine and the No.3 Zone.

The remainder of the drilling will be focused on expanding the resource. The company is completing a new mineral resource estimate in conjunction with its feasibility study, it said.

In addition to Snow Lake, Canada-based Alexis Minerals owns the Lac Herbin producing gold mine in Val-d'Or and the right to earn a 100% interest in the Lac Pelletier gold property in Rouyn-Noranda, both in Quebec.

The company is targeting mid-tier gold production levels in 2011-2012; it jumped more than 21% on Thursday, trading at $0.23 as of 12:08pm ET on the Toronto Stock Exchange.

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