Metminco proceeding with Miraflores study after funding documents complete

Metminco issued a funding update on Monday morning, announcing that the documentation in relation to the convertible note facility of AUD 0.75m with Redfield Asset Management and Redfield Advisory, as announced 3 April, was now complete.

The AIM-traded company said it had now received AUD 0.75m, and was advancing the Miraflores Feasibility Study towards completion during the third quarter of 2017 at which point it said it would be well placed to transition to the development phase of the project.

The company’s board also said it had the continued support of its other major shareholder, Lanstead Capital.

It said it executed a binding term sheet with Lanstead to provide approximately an additional AUD 0.2m in funding through a non-redeemable convertible note facility.

The issue price and face value of the facility was AUD 1,000 per Note and approximately AUD 0.2m in aggregate, the board said, with a coupon rate of 5% per annum, compounded monthly, with interest to be capitalised.

Maturity dates would fall precisely 18 months after the issue date, Metminco said.

The conversion ratio would be 16,461 shares per note calculated by dividing the AUD 1,000 face value per note by the conversion price, for 3,292,200 fully paid ordinary shares in aggregate.

Metminco also entered into a binding term sheet to enter into a sharing agreement with Lanstead, the board confirmed.

As it had previously announced, the Miraflores Feasibility Study, which was anticipated to be completed during the third quarter 2017, was progressing well with first gold pour targeted for first quarter 2019.

The company said it was targeting annual gold production averaging 50,000 ounces of gold per annum for nine years, with estimated all-in sustaining costs of $650 per ounce.

It said the proceeds from the Redfield and Lanstead convertible notes would be applied toward the Miraflores Gold Project Feasibility Study and working capital.

“The fundamentals of the Miraflores Gold Project are highly attractive and the company expects the feasibility study to demonstrate this,” said Metminco managing director William Howe.

“The focus of the company is to deliver the feasibility study to the market and transition to the development stage.

“The company is fortunate to have the continued support of its two largest shareholders, Redfield and Lanstead as it progresses Miraflores toward gold production targeted for early 2019.”

Howe said the board believed that the Cauca region was becoming more prospective and attractive to investment, thereby placing it and Miraflores in a “strong position” as demonstrated by the recent corporate activity in Colombia - such as the strategic investment in Continental Gold announced by Newmont Mining Corporation.

“It is important to remember that the planned development of the Miraflores Gold Project is the first leg of the company's strategy to become a significant gold producer.

“The Miraflores Gold Project is part of the 100% company-owned Quinchia Gold Portfolio which includes the Tesorito, Dosquebradas and Chuscal gold targets, all of which have the potential to increase targeted mine life and annual gold production.”