Telson Mining Corporation (CVE:TSN) (OTCMKTS:SOHFF) (FRA:TSGN) has closed the previously announced C$10.08 million private placing, the first tranche of the funding package, which will kick start renewed production from its Tahuehueto gold mine in Durango, Mexico.
The company issued 50.4 million units at C$0.20 each for total gross proceeds of C$10.08 million. Each unit is made up of one share and one-half of a share purchase warrant allowing the holder to buy another share for C$0.30 each within two years.
READ: Telson Mining secures US$25M funding to complete construction at Tahuehueto mine in Mexico
"Closing this private placement as the first tranche of the Accendo Syndicate recently announced US$25 million funding package now allows us to immediately reinitiate construction at Tahuehueto where Telson is targeting initial gold production near the end of 2021," said Ralph Shearing, the CEO of Telson in a statement.
"We thank our funding partners, Accendo Banco, Endeavour Financial and Empress Royalty as well our concentrate off-taker and lenders for their cooperation and assistance in our efforts to close this private placement."
Telson has said previously that the remaining amount needed to complete mine construction and commissioning at Tahuehueto is around US$15.4 million, which includes C$12.6 million for equipment and a 15% contingency, plus C$2.8 million of working capital to support operations until it reaches positive cashflow.
It is targeting initial production by the end of 2021 and ramping up to full production capacity during the first quarter of 2022.
In February 2021, the company struck an agreement with Accendo Banco SA de CV, Empress Royalty Corp. and Endeavour Financial (collectively referred to as the Accendo Syndicate) over a new US$25 million funding package.
In addition, Telson, Accendo Syndicate and Trafigura Mexico SA de CV entered into a memorandum of understanding to negotiate a potential definitive agreement to restructure the gold miner’s debt obligations to Trafigura and Nyrstar Canada.
The funding package comprises:
- A US$12 million loan facility from Accendo Banco expected to close in March 2021, with US$500,000 advanced to date;
- A US$5 million Silver Stream from Empress Royalty Corp. Telson is to deliver 100% the payable silver production from the mine for the first 1,250,000 payable ounces; thereafter, the Silver Stream Percentage delivery will step-down to 20% of the payable silver production. All streaming obligations fully terminate after 10 years. The signing of the stream agreement and the initial deposit of US$2 million is expected to be paid the first week of March, subject to standard conditions precedent, with the balance paid upon closing of formal agreements, including the Accendo Banco Loan;
- The US$5 million Silver Stream will be fully secured with a third-place ranking over Tahuehueto assets; and
- An US$8 million Equity Private Placement from Endeavour Financial and affiliates, Accendo Banco and affiliates, and third parties. Under the term sheet, Telson will issue up to 50.4 million units, where each unit is priced at C$0.20 per unit with half a warrant at C$0.30 per share exercise price for total proceeds of up to C$10.08 million.
As well as Tahuehueto, Telson has the Campo Morado project - an operating polymetallic base metal mine with mining and milling equipment currently producing at an average of around 2,150 tonnes per day (tpd), currently estimated to be Mexico’s sixth-largest zinc producer.
Contact the author at giles@proactiveinvestors.com