Minnesota issues $2.5 million loan
to Franconia Minerals
Spokane, WA— Franconia Minerals Corporation
(Franconia) announced that the State of Minnesota will provide a
loan of up to $2.5 million to help develop Franconia’s copper-nickel-PGM
resource project at Birch Lake in northeastern Minnesota.
At its recent quarterly board meeting, the Iron
Range Resources Board unanimously approved its half of the state
Under the terms of the loan, Franconia agrees
to contribute matching funds - based on a one-to-three ratio - up
to a maximum of approximately $7.5 million (at the possible maximum
loan limit of $2.5 million). The $10 million total would be used
for a two-phase technical development program aimed at advancing
Birch Lake towards becoming a producing mine. The formal agreement
is expected to be completed by early July.
Under the terms of the loan agreement, the State,
through its economic development entities, Iron Range Resources
and the Department of Employment and Economic Development, will
lend Franconia approximately $0.2 million for work to be completed
in 2006. Franconia will contribute an additional $0.6 million for
the same period.
Further State funding of approximately $2.3 million
will be matched against $6.9 million from Franconia for work to
be completed late in 2007 or the first quarter of 2008.
As consideration, Franconia proposed to issue
the lender warrants to purchase one share of common stock of Franconia
for each dollar advanced by the lender under the terms of the loan,
at an exercise price equal to 120% of the weighted average price
of the stock during the last full calendar month immediately preceding
the effective date of the loan agreement. The warrants will have
a term of three years.
Execution of the final agreement is subject to
approval by the TSX-V, Franconia’s board of directors and
the Governor of Minnesota.
The majority of these funds would be earmarked
for in-fill drilling to further define the Birch Lake resource as
well as to provide metallurgical samples for improving nickel recoveries
to concentrate and conducting feasibility level metallurgical testing
of both concentrate production and hydrometallurgical treatment
of concentrates to produce saleable nickel-cobalt and PGM intermediates
for refining and SX-EW cathode copper on site.
A small part of the funds would be utilized for
related environmental review and permitting along with conceptual
mine design for the Birch Lake project. Franconia currently expects
to apply for mining and related permits and to undertake a bankable
feasibility study in 2008.