Canadian gold exploration company Sacre-Coeur Minerals says it has signed a letter of intent with investment group AGR for a US$3 million financing that will be used for its mining projects in Guyana.
The company also announced a Cdn$500,000 private placement offering, with the proceeds also to be used for its mining projects in Guyana. The US$3 million gold forward sale agreement with AGR, an investment group focused on natural resource markets including minerals, agriculture and forestry, will be structured as a gold forward sale, Sacre-Coeur said in a statement recently.
Delivery on the sale will be from 6% of the company’s net gold production, for total delivery of 4286 ounces of gold against the forward sale. Full delivery must be made by March 31, 2017, with closing of the financing expected around May 15. Sacre-Coeur said closing is subject to approval by the company’s bondholders, as well as to a definitive agreement between the parties.
Meanwhile, under the private placement, the company will offer up 10 million units for sale at 5 cents apiece, and said it may increase the size of the offering by up to 20%, to a maximum of 12 million units.
The new funds will be used to advance Sacre-Coeur’s hard-rock and alluvial mining projects in Guyana, especially as the company prepares for the construction of its Million Mountain Zone 1 hard rock mine.
The company said that Million Mountain Zone 1 hosts roughly 500,000 ounces of gold as currently tested. The company has also drilled an additional 40 holes on the outside of the resource body, with the estimate to be updated as part of the definitive feasibility study in process.
Based on its internal analysis at the project, using a base case gold price of US$1,300 an ounce, Sacre-Coeur is projecting a net present value of US$103 million from the project. In addition to the development of the Million Mountain hard rock mine, the company is already producing some low-cost gold from an alluvial operation, with annual proceeds in the millions of dollars.
Sacre Coeur said that it continues to work on similar further financing arrangements with AGR and others, to raise a total of roughly US$28 million for its two projects. The company is planning to expand its alluvial production by installing multiple fine gold process plants capable of recovering a high percentage of gravity recoverable gold.
The Canadian junior company owns about 860 square kilometres of both producing and development-stage properties in Guyana, including another eight targets at Million Mountain.
For last year, the Vancouver, Canada-based company said it was looking to produce between 6,000 to 8,000 ounces of gold from its Cuyuni/ Mazaruni operation, which would be worth between US$8 million to $10 million. It also hopes to start a mine in the third quarter of this year.