In December, the company announced plans to establish a contract drilling division, to which two of its three company-owned wireline core drills have been allocated, in a bid to raise cash.

The move by Sacre Coeur was part of its strategy, along with the previously announced alluvial gold production, to fund its ongoing hard-rock gold exploration and feasibility studies, as well as to build working capital reserves entirely from internal cash flow.

Today, the company said it has issued an unsecured convertible debenture in the amount of $650,000 to a limited partnership. The debenture, which bears interest at eight percent per year, payable quarterly, will mature on February 2, 2013.

At any time after the four month hold period, the outstanding principal balance or any portion of it can be converted at the holder’s option into common shares of the company at a conversion price of $0.28 per share.

If after June 4, 2012, the weighted average trading price of the company’s common shares for any 20 consecutive trading day period is equal to or greater than $0.30, Sacre-Coeur, at its choosing, may force conversion.

Net cash flow from the company's alluvial mining operations and contract drilling division is expected to cover all operating costs, it said, including on-going hard-rock exploration, feasibility studies for development of a portion of the existing hard-rock gold resource, property holding costs, and general corporate and administrative costs.

"We are very pleased to have arranged this facility under favorable terms," the company said in a statement.

"The structure and scope of the facility is intended to provide the company with the working capital required for the front-end costs associated with set-up of the company’s contract drilling division with minimal dilution to our share capital if conversion is elected, and repayment is expected to be managed from cash flow if it is not converted."

The company is focused on the exploration and production of gold from its properties in Guyana. It currently holds 100 percent interest in around 850 square kilometres of mineral properties in Guyana, including the Million Mountain property, which hosts an NI 43-101 compliant hard-rock resource of 12,119,285 tonnes grading 1.0 grams per tonne (g/t) gold measured, and 2,175,278 tonnes grading 0.9 g/t gold indicated for a total 451,000 tr ounces gold combined.

The third Atlas Copco Exploration drill has been reserved to continue hard-rock gold exploration and resource expansion on the company's 850 square kilometre portfolio of properties in Guyana.

The move by Sacre Coeur is part of its strategy, along with the previously announced alluvial gold production, to fund its ongoing hard-rock gold exploration and feasibility studies, as well as to build working capital reserves entirely from internal cash flow.

"The company's in-house drilling program has enjoyed a very high level of performance and cost effectiveness over the past five years. This reputation for performance has resulted in high demand for the services of its contract drilling division," Sacre Coeur said in a statement.

Both drills are currently under contract with third party exploration companies working in Guyana, the company added.

Contract drilling demand is expected to remain strong in the coming months, Sacre Coeur said, ant the company expects the unit to be fully booked throughout 2012.

The company also said it expects combined net cash flow from its alluvial mining operations and contract drilling division to cover all operating costs. This includes ongoing hard-rock exploration, feasibility studies for development of a portion of its existing hard-rock gold resource, property holding costs, and corporate general and administrative costs, plus accumulation of additional working capital.

"We believe in this period of substantial global economic uncertainty, it makes sense for the company to tap its available capacity to generate working capital internally and to minimize its reliance on the capital market to continue to maintain its tight share structure," the company concluded.

Sacre Coeur explores properties for gold, metals and diamonds in South America, initially focusing on exploration and production of gold from its properties in Guyana.

The company holds a 100 percent interest in approximately 850 square kilometres of mineral properties in Guyana, including the Million Mountain property, which hosts an NI 43-101 compliant hard-rock resource of 12.12 million tonnes grading 1.0 grams per tonne (g/t) of gold measured, and 2.18 million tonnes grading 0.9 g/t gold indicated for a total of 451,000 troy ounces of gold combined.

In early October, Sacre-Coeur announced that it found significant sulphide mineralization in initial drill testing of targets at its Million Mountain propery in north central Guyana, confirming IP anomalies generated by a ground survey. Hole 18911 encountered several narrow veins showing significant gold values, including 0.30 meters grading 49.2 grams per tonne (g/t) of gold, and 0.33 meters grading 20.0 g/t gold.

In order to minimize mining dilution, a systematic grade control system has been implemented, focusing the company's operations on the "pay zone."

Sacre Coeur installed a new booster pump to the water supply system at its refinery, allowing for the increase in pressure and volume to break up cemented gravel, moving more material to the plant. Now, the dredge has a capacity of over 50 cubic metres of loose gravel per hour.

The refinery, which processes the mine concentrates, also received a Falcon centrifugal concentrator and attendant screens, materials handling equipment, final gravity cleaning equipment and an electronically-controlled smelting furnace.

Sacre Coeur said the equipment will help the company to efficiently produce high purity gold bars, without the use of mercury. The use of several gravity concentration devices to 'clean' mine concentrates will increase the company's recovery rate.

Since the new mining equipment's installation, overall average production has been about 5.24 troy ounces of gold per day. Production continues to improve, rising to over eight troy ounces of gold per day in the last two days alone.

To date, the company has sold 84.4 troy ounces of gold bars, with grades of 94% gold, to the Guyana Gold Board. Sacre Coeur pays a five percent net smelter royalty (NSR) and a two percent net production royalty to the Government of Guyana.

Sacre Coeur estimated cash operating costs of USD $3,206 per operating day. With the implementation of this new equipment, however, the company said its production has already begun to add net cash flow, significantly offsetting these operating costs.

Mark Lotz will serve as the new CFO and director of the company, replacing Limor Rubin, who has resigned to pursue other interests as she re-locates overseas. Rubin will remain on as financial consultant for the company for one year.

Lotz is a chartered accountant, with more than 17 years of experience in the minerals sector and related securities business.

He has held CFO and other senior financial positions with many well known mining and exploration companies, as well as two Vancouver-based securities firms.

Prior to that, Lotz served as a financial compliance officer for the Vancouver Stock Exchange, after four years as a senior auditor with Coopers and Lybrand, focusing on the mining and tax sectors.

The second appointment is Jennifer Todhunter, who will now become VP of Financial Administration, having served as finance manager for the company since 2005.

Todhunter, who has spent the last 10 years working with publicly traded companies mostly within the mining industry, has knowledge in accounting and finance dealing.

Vancouver-based Sacre-Coeur is engaged in the development and exploration of gold, metals and diamonds in South America, with an initial focus on exploration for gold on its properties in Guyana, such as Million Mountain.

The targets are located on Zone 1 of the property, which is located on the 20 kilometre Million Mountain structural trend within the company's lower Puruni Block of concessions.

The company said the targets suggest the potential to expand the preliminary Zone 1 NI 43-101 compliant resource estimate from September 2008. The 2008 report calculated measured resources of 12.12 million tonnes grading 1.0 g/t gold, and indicated resources of 2.18 million tonnes grading 0.9 g/t gold. Total contained gold was estimated at 451,397 tr ounces.

Sacre-Coeur has budgeted up to 23,000 metres of drilling to define the possible extension areas to the Zone 1 resource. Three such areas were identified by the geophysical surveys.

Once the drilling is completed, the company plans to release an updated resource estimate for the zone, expected in the fourth quarter. The new resource will also include 41 previously reported holes drilled since the last estimate was issued more than two years ago.

Last month, Sacre-Coeur announced that steel giant Severstal (LON:SVST)(RT:CHMF) had terminated a takeover bid for the company. The cancelled deal, which exhausted the company's liquid assets, led it to complete a C$2.58 million private placement in order to meet its operational goals for the year and jumpstart drilling at Million Mountain.

The South America-focused mineral explorer issued 4.68 million units at C$0.55 per unit to a group of private and institutional investors, it said.

Each unit consists of one common share of Sacre-Couer and one half of one share purchase warrant, with each whole warrant entitling the holder to purchase an additional common share at C$0.75 until March 15, 2013.

As a result of Severstal cancelling the conditional takeover agreement, which was originally supposed to close in November, Sacre Coeur was forced to undergo a review of all aspects of its operations, as the protracted deal (delayed several times by Severstal) exhausted the company's liquid assets. The Russian steel company cited "failure of due diligence to their satisfaction" as the reason for the cancellation of the $77 million acquisition.

Proceeds from the new placement, a critical source of capital for Sacre Coeur in order to meet its goals for the year, will be used to jumpstart an aggressive exploration campaign on the company's Million Mountain gold property in Guyana. Fifteen thousand metres of drilling are anticipated in the next seven to eight months.

"This additional capital will allow us to continue our budgeted programs in 2011 as we ramp-up alluvial gold production and drilling on the Million Mountain trend," said Sacre-Coeur CEO Gregory Sparks.

As a result Severstal's cancellation, South-America focused Sacre Coeur was forced to undergo a review of all aspects of its operations, as the protracted deal (delayed several times by Severstal) exhausted the company's liquid assets.

Sacre Coeur's stock has plummeted from its $1.11 close last Thursday, the day before the cancellation, to its current level of $0.58.

On a conference call last night, Sacre Coeur chairman Irwin Olian stressed that the financing was of "critical importance" at this time in order to meet the goals set out for 2011.

In the notice received from Severstal last Friday, the Russian company cited "failure of due diligence to their satisfaction" as the reason for the cancellation of the $77million acquisition.

The conditional agreement between the two companies, signed back in September, was originally supposed to close in November. Earlier this month, Sacre Coeur granted Severstal a two week extension to complete due diligence. Allegedly, Severstal said that the large-scale potential of Sacre Coeur's operations was not sufficient at the time to lend enough value-add to the large company.

Severstal had been planning an IPO on the London Stock Exchange, but the listing was cancelled a day before the notice to Sacre Coeur was received.

With the new proceeds from the planned offering, expected to close within two weeks, Olian said his company plans on kick starting an aggressive exploration campaign on its Million Mountain property in Guyana, with 15,000 metres of drilling anticipated in the next seven to eight months.

Geophysical surveys on the property conducted last fall identified three prime target areas adjacent to the current resource body, hoped to "exponentially" increase resources in a planned updated estimate.

Under the terms of the proposed financing, Sacre Coeur will offer 4 million units at C$0.55 per unit. Each unit will consist of one common share, and one half warrant, with each whole warrant allowing the subscriber to purchase one additional share at C$0.75 for a period of two years from closing. The private placement deal also includes an option to increase the size of the offering by up to 20% to a maximum of 4.8 million units.

Olian stressed that the offering was for a relatively minimal amount of shares so as to protect share capitalization.

"We are prepared to move ahead on all fronts without Severstal. What appears to be a disappointment may actually prove to be a very positive development in the long term," he said.

Severstal was actually an existing shareholder at the time it made the unsolicited offer for Sacre Coeur, but it is not known whether it is still a stakeholder. Sacre Coeur said that it remains open to discussion with other prospective partners that could add shareholder value. 

Sacre Coeur said in a statement today that it received termination notice from Severstal under terms of the conditional agreement signed between the two companies back in September. The notice cited "failure of due diligence to their satisfaction" as the reason for the cancellation.

Earlier this month, Sacre Coeur granted Severstal a two week extension to complete due diligence for the acquisition, which was originally supposed to close in November.

"We are disappointed to learn that Severstal has concluded Sacre-Coeur does not fit into its near-term development plans," said Sacre Coeur chairman, Irwin Olian.

"However, our management team remains excited about the Company's prospects for the future and we are committed to achieving long-term success with our projects in Guyana."

Sacre Coeur said it will be scheduling a conference call for investors and analysts next week to discuss the cancellation of the Severstal deal, as well as to outline the company's business plan to ramp up development.

Sacre-Coeur explores and develops properties for the potential mining of gold, metals and diamonds in South America. The company has roughly 1000 sq km of property in Guyana, including the Million Mountain property, where it is exploring for gold.

According to a company statement released today, due diligence is still proceeding, together with the preparation of the required documentation for closing the C$1.60 per share transaction, which is still subject to court and shareholder approvals, as well as other customary conditions.

The deadline to complete the due diligence on the company has now been extended to February 14, 2011, and both parties said they aim to close the deal by mid April.

The deal, which was announced in September, was originally supposed to close three days after a special shareholder meeting in November, as Sacre Coeur's board has already approved the transaction. New dates for the stockholder meeting have still not been set; Sacre Coeur said that a further update will be provided when this occurs.

Sacre-Coeur explores and develops properties for the potential mining of gold, metals and diamonds in South America. The company has roughly 1000 sq km of property in Guyana, including the Million Mountain property, where it is exploring for gold.

Last week, Severstal announced it would acquire Sacre-Coeur in a C$77 million deal.

The deal, which gives Severstal Gold an entry point into South America, also involves the purchase of all of the company's outstanding warrants and options for a payment equal to the difference between C$1.60 and the excercise price of the respective warrant or option.

The purchase price of C$1.60 represents a 43% premium to Sacre-Coeur's Tuesday closing price of C$1.12 on the Toronto Venture Exchange.

The offer, for which the financing is already in place, has been approved by Sacre-Coeur's board.

"Severstal Gold and its affiliates are highly experienced in international mining operations and have access to the relatively large financial and technical resources that may be required to bring Sacre-Coeur's Guyanese projects to fruition," said principal shareholder of Sacre-Coeur, Irwin A. Olian.

The deal, which is structured as a scheme of arrangement, is still subject to due diligence, shareholder approval and other customary closing conditions, and if Sacre-Coeur decides to accept a competing offer, it will pay Severstal a termination fee of C$2.75 million.

Olian has agreed to support the transaction at the special shareholder meeting, due to take place in November 2010, three days after which the deal should close.

Sacre-Coeur is engaged in the acquisition, exploration and development of properties for the potential mining of gold, metals and diamonds in South America, initially focusing on exploration for gold on its properties in Guyana.

The company was up 40% by mid-afternoon trading on Wednesday, reaching highs of $1.55 as of 2:41pm ET on the TSX-Venture Exchange.

The current drill program will be focused entirely on Zone 9, where the Canadian listed company is also undertaking trenching and geophysical surveys to firm up the best locations to target with the drill bit.

“Trenching to date has exposed numerous new mineralized veins apparently crossing the granite-greenstone interface,” Sacre-Coeur noted today.

Most of the assays from trenching are still pending, however, the company did report that one 50 centimetre channel sample returned approximately 41 grams per tonne gold perpendicular to the dip of a vein hosted in granite. A separate 1 meter panel sample taken down dip from the vein returned 69 grams per tonne gold.

Sacre-Coeur has already completed six holes, drilled no deeper than 200 meters, near areas which has drawn the attention of artisanal miners in the past.

“While no assays have yet been received from this phase of core drilling, mineralized quartz veining with visible gold has been encountered, as well as sheared and silicified breccias,” the company reported.

Sacre-Coeur will be drilling at Zone 9 over the next few months.

The drill results included an intersection of 68.65 metres grading 0.94 g/t (grams per ton) gold including 1 meter grading 9.18 g/t gold, 1 meter grading 6.30 g/t gold, and 1 meter grading 7.26 g/t gold.  Five other narrow zones grading over 2 g/t gold were encountered, including intersections of 0.47 meters at 13.44 g/t gold, 0.53 meters at 8.62 g/t gold, 1 meter at 3.25 g/t gold, 1 meter at 2.32 g/t gold and 23.6 meters at 0.53 g/t gold.

The current program is aimed at expanding the Zone 1 resource. This phase of drilling is testing for continuation of the mineralized body to the North, East, South, and at greater depth than the original resource drilling.

In September 2008 Sacre-Coeur reported an NI 43-101 compliant interim resource estimate for Million Mountain of 12.1 Mt (million tonnes) grading 1 g/t gold and indicated resources of 2.2 Mt grading 0.9 g/t gold for total contained gold of 451,397 oz (ounces), consisting of 388,456 oz in the measured category and 62,941 oz in the indicated category.

The current phase of resource expansion drilling has included slightly more than 4,660 meters drilled to date in nine holes.

Earlier this month, the company told investors that it had completed its conversion to hydraulic mining - high pressure water jets – at Zone 1. With capacity now at target rates, the company expects gold production to be maximized through fine-tuning of the processing plant over the course of the next two to three months.

Zone 1 already hosts a 43-101 compliant measured resource of 12.12 million tonnes grading 1 gram per tonne gold and indicated resource of 2.175 million tonnes grading 0.9 grams per tonne gold, or a combined measured and indicated resource of approximately 0.45 million ounces.

Drilling has continued at Zone 1, where the company reported that drill hole MM17510 intersected 103.6 meters grading 1.26 grams per tonne gold, including a higher grade 15 meters @ 4.81 grams per tonne gold.  The drill hole encountered seven significant zones of gold mineralization in total and averaged 0.4 grams per tonne gold from surface to 589 meters.

Sacre-Coeur has completed 7 holes, or just over 4,000 meters of drilling in the current campaign.  Drilling was designed to test the mineralized system at depth to increase the company’s understanding of the controls of the mineralization and to add to the current resource estimate.  Drilling has focused on areas to the south, east and north of the current resource, and at depth.

“Significantly, bedrock exposed on the floor of the test mining pit in Alluvial Area 2 which is consistent in rock type and character to that of the existing Zone 1 resource host has provided further encouragement for extension of the Zone 1 resource for an additional 0.5km further to the Northeast,” the company reported. “This newly exposed bedrock is being mapped and evaluated for further step out drilling on a probable extension of Million Mountain Zone 1 in addition to the already planned ongoing resource expansion drilling.”

Beyond drilling at Zone 1, Sacre-Coeur has been systematically drilling other targets along the 20 kilometre Million Mountain trend.

The units will consist of one share in the company and one-half of one share purchase warrant, allowing subscribers to purchase one additional share in the company at C$1 within two years of the closing date.

The company reserves the right to pay a cash finders fee of up to 7% of the total gross proceeds of the offering.
Sacre-Coeur has spend the past few years testing and advancing a number of prospective targets in Guyana, predominately focused on gold mineralization, but also diamonds. 

More recently, focus has sharpened on the potential of alluvial gold deposits, which require comparatively low capital expenditure compared to hard rock mines to put into production. The company was expected to commence sales from its Million Mountain gold project, where it is preparing to launch full scale production after receiving positive results from a test program.

The company presently has an interest in approximately 1000 square kilometres of mineral properties in Guyana, including the Million Mountain property.

Martohardjono brings two decades of experience in the mining industry with a number of companies, including Bondar Clegg Canada Land ALS Chemex.

Gregory Sparks, CEO of Sacre-Coeur, said he was pleased to have secured the services of Martohardjono to oversee a “critical element” in the alluvial gold production process.

Just last week, Sacre-Coeur Minerals announced a boardroom reshuffle to better reflect its intention to become a gold producer. Sacre-Coeur promoted Sparks to the position of President and CEO, and secured the services of Allen Heyl to fill the role of Director of Mining and Exploration. Irwin Olian, who has been instrumental in the company’s progress in recent years, will stay on as Chairman of the company and will continue to serve as a member of the board of directors.

The company has spend the past few years testing and advancing a number of prospective targets in Guyana, predominately focused on gold mineralization, but also diamonds.  More recently, focus has sharpened on the potential of alluvial gold deposits, which require comparatively low capital expenditure compared to hard rock mines to put into production.

The company has spend the past few years testing and advancing a number of prospective targets in Guyana, predominately focused on gold mineralization, but also diamonds.  More recently, focus has sharpened on the potential of alluvial gold deposits, which require comparatively low capital expenditure compared to hard rock mines to put into production.

Sacre-Coeur has promoted Gregory Sparks to the position of President and CEO, and has secured the services of Allen Heyl to fill the role of Director of Mining and Exploration. Irwin Olian, who has been instrumental in the company’s progress in recent years, will stay on as Chairman of the company and will continue to serve as a member of the board of directors.

"We are delighted to strengthen our management team with the addition of David Heyl and to increase Greg Sparks' responsibilities by appointing him as our new President and CEO,” stated Irwin Olian, Chairman of Sacre-Coeur, “As we now focus our efforts on development and expansion of our alluvial mining operations in addition to continuing with our ongoing exploration programs in Guyana, we felt it was important to strengthen our professional mining management… I remain personally committed to maintaining an active role in senior management as Chairman, focusing on overall corporate strategy and business development, interfacing with the capital markets and providing general leadership."

Gregory Sparks possesses over 35 years of mining experience as a senior mining executive in the minerals industry, covering exploration, feasibility, development and operation of both surface and underground mining projects.

Allen Heyl will be tasked with directing the day-to-day operations of Sacre-Coeur’s exploration and alluvial mining programs in Guyana, including supporting infrastructure.

Sarce-Coeur is engaged in the acquisition, exploration and development of properties for the potential mining of gold, metals and diamonds in South America. The company’s initial focus is on its gold properties in Guyana. The company presently has an interest in approximately 1,000 suare kilometres of mineral properties in Guyana, including the Million Mountain property.

Clearing and pre-production stripping of the initial mining area is complete. The initial area prepared should provide about three months' production at the anticipated target rate of 1,000 cubic metres per day. Site preparation and expansion will continue on an ongoing basis commensurate with production.

The wash plant/sluice, is essentially complete, with only a few small details still left, the remaining details should be done by the end of October. The gold refinery is under construction and should be completed during November.
The gravel pump skid and the fresh water pump skid have been completed, tested and are now functioning. The gravel pump skid, wash plant and water pump skid will be moved across the river from the construction site to the mining site.

At the processing facility the amalgamator is assembled and set on its base, testing is due to be undertaken shortly. The gold refinery is under construction and should be complete during November.

The construction of the site’s support infrastructure is also progressing, with the ramps for the ferry crossing and the road to the mining area all complete.

The contract for site security from an independent, professional security service is complete and scheduled to start in November. The agreement for helicopter transport of the gold from the project site to Georgetown and attendant armoured car service pickup from the helicopter for delivery to the point of sale is in progress, and should be in place during November.

All remaining tasks are now expected to be complete by November 30 2009. Commissioning and debugging of the equipment should be achieved in approximately two weeks following start-up, with commercial production targeted before year-end.

At the Million Mountain project in Guyana Sacre-Coeur is assessing nine alluvial gold zones within the Puruni river paleochannel. In June, the junior exploration company confirmed that it had already completed 83 test pits spaced approximately 100 meters apart along grid lines located 160 meters from each other. The results showed that a gold bearing alluvial sand and gravel resource target stretched 1.66 kilometres by 0.80 kilometres.

Most recently, Sarce-Coeur announced it had commenced the second phase of drilling on target Zone 9 on the Million Mountain. The second phase includes up to ten additional holes for a total 2,500m, is aimed at adding strike length to the known mineralised zones. The company will then embark on a five hole drilling programme to test a geochemical anomaly located south ant west of Zone 1 and could potentially extend it with another gold mineralisation.

The second phase, which includes up to ten additional holes for a total 2,500m, is aimed at adding strike length to the known mineralised zones as well as examining a major structural intersection, which the company says could contain a significant near-surface mineralisation. Several other structurally controlled targets have been developed as a result of surface work conducted after the first phase was wrapped up.

The company will then embark on a five hole drilling programme to test a geochemical anomaly located south ant west of Zone 1 and could potentially extend it with another gold mineralisation.

The zone hosts a preliminary NI 43-101 compliant resource of 451,000 ounces of gold, including 388,456 oz in the measured category and 62,841 oz in the inferred category.

“We are continuing with our exploration of hard-rock targets at Million Mountain at the same time as we are proceeding to implement our test mining program for alluvial gold deposits in the region,” said Chief Executive of Sacre-Coeur.

The company commenced test mining at Zone 2 back in summer after identifying nine alluvial gold zones following the completion 83 test pits. The weight of the total recovered gold concentrate was 4.23 grammes from the 830 kilos of total sample weight.