TORONTO (miningweekly.com) – TSX- and NYSE-listed AuRico Gold on Tuesday said it had agreed to participate in a private placement of 70.6-million common shares of fellow TSX-listed firm Carlisle Goldfields and had entered into an option agreement to acquire 25% of Carlisle’s Manitoba-based gold camp.

Under the terms of the private placement, AuRico would subscribe to Carlisle shares at a price of C$0.08 apiece, for total payment of about C$5.6-million.

On closing, AuRico would own about 19.9% of the issued and outstanding common shares of Carlisle on a nondiluted basis.

In conjunction with the private placement, AuRico had entered into a joint venture agreement regarding Carlisle's Lynn Lake gold camp, located in Manitoba, under which AuRico would acquire a 25% interest in the project for a first payment of C$5-million, with the option to earn up to a further 35% interest by funding C$20-million on the project over a three-year period and delivering a feasibility study within that timeframe.

Lynn Lake is a highly prospective past-producing gold camp consisting of five near-surface deposits with significant existing infrastructure in place.

"This transaction with Carlisle represents a compelling, but low-risk opportunity to participate in the early-stage advancement of a highly prospective mining district in Canada and is consistent with our strategic focus on high-quality assets in North America,” AuRico president and CEO Scott Perry said.

Carlisle had in February published the results of an optimised preliminary economic assessment on the Lynn Lake gold camp, which indicated an after-tax net present value, at a 5% discount, of $257-million, and an internal rate of return of 26%.

The report assumed a gold price of $1 100/oz, which would have resulted in the initial capital costs of $185-million to be paid back in 2.8 years.

The mine plan envisioned an initial 3 750 t/d mill, ramping up to 7 500 t/d at full capacity, to process ore grading 2.2 g/t over the 12-year mine life. The yearly gold output was estimated at 145 000 oz, with life-of-mine output expected to total 1.74-million ounces of gold and 1.59-million ounces of silver.

AuRico had last week reported a $15.7-million loss for the third quarter as production costs rose and gold prices fell.

The company's TSX-listed stock rose 12.09% in afternoon trading to C$4.08 apiece, while Carlisle’s stock rose 12.5% to C$0.045 apiece on Tuesday.