Minera Gold secures finance for Peruvian copper mill acquisition

Published at Sep 15, 2014, in Mining

Minera Gold (ASX:MIZ) has signed binding financing agreements for US$5.5 million of funding to complete its proposed acquisition of the San Santiago processing plant in Peru, housing both copper and gold processing circuits.

The acquisition package also includes 9,000 hectares of surrounding mining and exploration rights.

Funding has been sourced through MIZ’s existing precious metals streaming partner, SilverStream SZEC, in combination with a mezzanine debt facility provided by an existing MIZ shareholder.

SilverStream will fund US$3 million via the silver purchase agreement already in place, and US$1.4 million by bringing forward the first milestone tranche of the original gold purchase agreement.

The mezzanine agreement with an existing shareholder is a $1.1 million facility provided over two years at 18% interest, for the purpose of completing the San Santiago mill acquisition. It is comprised of US$600,000 debt funding, and a convertible component of US$500,000.

Subject to the vendor satisfying final conditions precedent, settlement of the acquisition is now expected around the 12th September.

Working capital facility

MIZ continues to assess proposals from both commodity traders and term debt providers for the provision of a long-term working capital facility.

Management has to date received and reviewed a number of proposals of between US$3 to US$5 million in debt and convertible facilities, however MIZ believes that better terms will become available with acquisition funding now complete.

Upon securing this facility, proceeds will be used to repay all amounts owing to Anglo Pacific Group, with the balance for working capital.

San Santiago CIP gold-copper circuit

MIZ began commercial processing through the San Santiago mill’s CIP circuit in the first half of August. Gold shipments commenced soon after, with ore from the Torrecillas mine providing the majority of feedstock.

Equipment availability within the circuit was better than expected, with the crushing and grinding circuits operating at or above nameplate capacity. However, CIP operations experienced some shutdowns as a result of external power supply issues owing to a recent 6.9 magnitude earthquake in the region.

The power supply issues have now been rectified, and a larger diesel generator for backup power has been ordered.

Metallurgical balance testing and reconciliation is still ongoing and being verified by technical consultants. In addition, consultants will undertake a full assessment of the plant’s performance following the first month of operations post commissioning.

Toll treatment contracts

MIZ has signed three contracts to date with local mine operators for the toll treating of third party ore. These contracts run for 12 months, and delivery of ore has commenced.

Commitments received equate to around 22% of plant capacity and are for 300 tonnes per month grading 45 to 90 grams per tonne gold; 200 tonnes per month grading 30 to 45 grams per tonne; and 150 to 200 tonnes per month grading 17 to 25 grams per tonne gold from oxide material.

Additional sources of quality gold ore continue to be assessed to ensure full compliance with local laws in relation to the processing of third party material.

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