The $6 million in fresh capital raised by
Sparks-based Golden Phoenix Minerals marks
a key turning point for the publicly held company.
"We've saved the company," says President
Robert Martin."We got it back on two feet. Now
we can start building the company rather than
salvaging the company."
In part, the company had the good fortune
to be in the right place at the right time.
Its Ashdown Project molybdenum mine 115
miles north ofWinnemucca is cranking up production
just as Canadian mining investors are
paying more attention to the metal that's used
as an alloy in stainless steel.
Their interest follows a sharp price spike.
Trading at $3 a pound a couple of years ago,
molybdenum last week was priced at $29.
The Ashdown Project mine and mill,
Martin says, has shipped about $2.5 million
worth of molybedenite since it came on line late
last year.
"All of sudden,molybdenum is the hottest
thing in Toronto,"Martin says of Canadian mining
investors."We could have raised $12 million
or $15 million."
Instead, the company came away with $6
million in fresh equity in a private placement.
Sprott Asset Management Inc. of Toronto, which
assembled a molybdenum-based investment
fund, took the lead position with $3 million in
Golden Phoenix stock.
With the money, the company plans to:
* Undertake more exploration and development
of the Ashdown Project in northern
Nevada.
* Begin development of another potential
molybdenum mine in Ontario.
* Resume work at the Mineral Ridge Gold
Mine 32 miles west of Tonopah, which was shut
down in 2005 when the company ran into
financial trouble.
The company said last week that the exploration
around the Ashdown Project will use a
technique known as "induced polarization."
A contractor will send an electric current
through the ground along precise intervals.
Because different types of rock vary in the way
they conduct electricity, the company will be
able to create a three-dimensional model detailing
possible mineral deposits hundreds of feet
below the surface.
The new financing and widened scope
come as Golden Phoenix continues a history of
operating losses. In 2006, it posted a loss of $4.1
million compared with a loss of $5.9 million a
year earlier.
The company has rung up a deficit of more
than $35 million since its inception in 1997,
and its auditors have raised a flag about its ability
to stay in business unless it continues to
attract fresh capital and begins to operate at a
profit.
The stock was trading at 41 cents a share
last week on the Over the Counter Bulletin
Board system, about the middle of its range of
28 cents to 52 cents during the last 52 weeks.
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