1911 Gold Corp (TSX-V:AUMB, OTCQB:AUMBF, FRA:2KY) said on Monday it has drawn the first $15 million tranche of a $30 million secured credit facility arranged with Auramet International to advance development at its True North Gold Project in Manitoba.
The initial funding follows a loan agreement signed on February 19 and will be used to support operational milestones at the project, including the purchase of mining equipment, underground development at the True North mine and the installation of a new crushing circuit at the mill.
The credit facility carries an annual interest rate of 12%, calculated monthly, although no interest will accrue on the first tranche for six months following the drawdown. Repayments will begin 13 months after the closing date, with the $15 million to be repaid in 12 equal monthly installments of $1.25 million until maturity 24 months after closing.
The loan is secured by a first-ranking security interest over all of 1911 Gold’s personal property and a continuing collateral mortgage over the company’s True North project and its Rice Lake Greenstone Belt exploration properties.
The remaining $15 million under the facility is expected to become available between 90 and 180 days after the initial closing, subject to certain conditions.
As part of the financing arrangement, the company paid Auramet a $1.05 million arrangement fee, representing 3.5% of the total credit facility, through the issuance of 1.37 million common shares priced at C$1.05 each.
1911 Gold also paid a drawdown fee of $375,000, equal to 2.5% of the first tranche, by issuing 489,142 shares at the same price and granting Auramet 4.5 million warrants exercisable at C$1.07 per share, a 10% premium to the five-day volume-weighted average price before the loan agreement. The warrants expire on the facility’s maturity date.
1911 Gold is focused on restarting operations at the True North mine by 2027 and controls about 62,000 hectares of prospective land in the Rice Lake Greenstone Belt, a historic gold mining district in Manitoba.