Lumina Gold Corp (TSX-V:LUM, OTCQX:LMGDF) said it has entered into an agreement with the company's largest shareholder, Ross Beaty, to establish a C$10.0 million unsecured credit facility,
The Vancouver-based company said the facility will provide short-term financing for remaining drilling costs, pre-feasibility study costs, and general corporate and working capital purposes.
"We are very appreciative of Ross' continued support to realize the long-term value of the Cangrejos project. Recent events in global markets and Ecuador have made this an unfavorable time to seek conventional equity funding and we, therefore, view this as the best path to allow Pre-feasibility work to continue unimpeded,” Marshall Koval, Lumina Gold president and CEO said in a statement.
READ: Lumina Gold reports more drill results from Cangrejos project, including highest grade intercept to date
“Cangrejos Pre-feasibility site work has continued uninterrupted. The project is in El Oro province, a jurisdiction with a historic tradition of mining where the company and its predecessors have been operating with a strong social license for decades," he added.
The facility bears interest of 10.0% per annum and matures on the following, whichever comes earliest:
- (i) July 5, 2023,
- (ii) two business days after the company receives aggregate gross proceeds from one or more equity financings in excess of C$15.0 million;
- or (iii) the date of a change of control of the company, at which time it must be repaid in full.
The company said it intends to grant 3,000,000 common share purchase warrants to Beaty. The bonus warrants will entitle the holder to acquire one common share of the company at a price of C$0.38 at any time during the 24-month period following the issuance date of the bonus warrants. In the event the loan is repaid prior to July 5, 2023, the term on the bonus warrants will be reduced from 24 to 12 months from the date of issuance.
At Cangrejos, as part of the 2021/2022 drill campaign, Lumina Gold said 29,932 metres of resource definition drilling and 3,059 metres of geotechnical drilling have been completed with an expected 1,700 metres of resource drilling and 450 metres of geotechnical drilling remaining. The remaining work is being completed with three rigs on-site and should be complete by August.
Lumina Gold has already begun the planned downsizing of camp staffing and reducing in-country costs as the drilling program winds down. The company is progressing as planned on the key areas of the pre-feasibility study with Ausenco and expects to have results in Q2 2023.
The company is a precious and base metals exploration and development company primarily focused on Cangrejos.
Contact the author at jon.hopkins@proactiveinvestors.com