EXPLORATION company, Glencar, plans to raise its stake in the Wassa gold project in Ghana from 45.2 per cent to 61 per cent at a cost of between $ 11.4 million (£7.1 million) and $12.2 million (£7.6 million). The deal is subject to raising the necessary finance and shareholder approval.

Glencar has no borrowing but will need finance to pay for the extra shares. It is looking at a number of options, said managing director, Mr Hugh McCullough. No decisions have been made but a statement should be made in a few weeks, he added.

Glencar said that the acquisition would give it "dear majority control of Wassa during a period when it is intended that a feasibility study be completed and that a major exploration drilling programme be undertaken, designed to double the amount of drilling carried out to date". Mr McCullough said "we are not looking at blue skies anymore. We are going to make money".

Wassa owns 90 per cent of Satellite Goldfield which has a mining lease over a 57 square kilometres area in the western region of Ghana. The Ghanaian government has the other 10 per cent.

Glencar has a 45.2 per cent stake in Wassa, Moydow has 39 per cent and Emerging Markets Gold Fund (EMGF) has 15.7 per cent. In line with the agreement between the shareholders, EMGF has offered its 15.7 per cent to the other Wassa shareholders for $12.2 million. Glencar has agreed to take up its pro rata entitlement and any additional shares not taken up by Moydow. Subsequent to the EMGF offer, Moydow has offered its 39.1 per cent stake to Glencar for $28.4 million.

This is equivalent to $ 11.4 million for a 15.7 per cent stake, or $0.8 million less than that offered by EMGF. Mr McCullough, conceded that the Moydow offer is cheaper but there are other factors" than money which would indicate "which interest we should buy". Glencar is not interested in going beyond the 61 per cent at this stage which it feels is "an adequate control".

The offer is considerably above the $1.7 million Glencar paid for the 6.7 per cent stake it acquired from Kappes Cassiday Partners last September. An equivalent price for the 15.7 per cent which it is proposing to buy would be $4 million. On this basis, the offer price looks very expensive. However, Mr McCullough stressed that the 15.7 per cent would give Glencar control and the amount of gold in the prospect has grown since September. The consideration will end up being very cheap".

He disputed that all the shareholders appear to be selling out of the project. It is knot that they (EMGF and Moydow) want to sell, we sought their shares". Mr McCullough noted that Glencar always wanted to have control. "There were five shareholders, now there are three".

More than 420 bore holes have been drilled on the Wassa prospect. It is expected to produce around 120,000 ounces of gold per annum.