Cerro de Pasco Resources (CSE:CDPR, OTC:GPPRF) Inc announced it has secured a significant financing deal of around US$25 million to strengthen its balance sheet during the physical development stage of the Santander Pipe Project at its Santander Mine in Peru.
Under the terms of the agreement, CDPR will receive a loan facility of up to US$8 million from Arena Investors (ARENA) and a revolving concentrate pre-payment facility of US$4 million to US$7.5 million from Ocean Partners UK Limited (OPUK).
Another US$5 million will come from a private Peruvian fund in exchange for a 10% ownership in Cerro de Pasco’s Santander subsidiary.
“Our Santander Mine in Peru is at a turning point in its evolution as we focus on the significantly higher-grade Santander Pipe,” Cerro de Pasco’s CEO Guy Goulet said in a statement.
“Capital support for completion of development works at Santander will bring our cash cost down to US$0.90 per pound of zinc, positioning us close to the bottom quartile of the cost curve for zinc producers."
OPUK's pre-payment facility will be based on commercial contracts for the supply of zinc, copper, and lead concentrates. Cerro de Pasco will receive monthly advances from OPUK, with the facility potentially being redrawn upon the delivery of sufficient material to repay outstanding amounts.
Cerro de Pasco will issue C$2.5 million in warrants to OPUK as part of the agreement at an exercise price of C$0.25.
ARENA's loan facility, secured against Cerro de Pasco’s Santander assets, will provide up to US$8 million over 36 months. Repayment terms include six months of interest-only payments, followed by 30 months of equal principal and interest payments. The company will issue C$5 million in warrants to ARENA upon receiving funds from the loan facility, also priced at C$0.25.
The financing deal is subject to various conditions, including the execution of binding pre-payment documentation and the completion of additional equity or subordinated debt.
The company is also in advanced discussions with suppliers for subordinated financing related to the Santander Mine's development.
The 6,000 hectare Santander Mine is in the highly prospective Antamina-Yauricocha Skarn Corridor, located 215 kilometres from Lima.
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