Proceeds will provide contingency funding for the 100%-owned Revenue Virginius Mine (RV Mine) in Colorado as well as financing for the growth of the resource base at the mine which may enable the company to grow future production.
Aurcana shares were down 10.4% or $0.115 to 99.5 cents on volume of just over 2.0 million and trade in a 52-week range of $1.25 and 15 cents.
The announcement comes just weeks after Aurcana secured a US$28 million project financing facility as well as a five-year benchmark-based offtake agreement with Trafigura Trading LLC for 100% of the lead and zinc concentrate produce from the RV mine
Aurcana acquired Ouray Silver Mines Inc., which owns the Revenue-Virginius polymetallic mine in Ouray, Colorado in December, 2018. A new mill was built in 2011 and the mine was last operated in 2015 before being placed on care and maintenance.
Since 2015, the company said more than $20 million has been invested. An updated feasibility study was completed in June 2018. The mine is permitted for immediate production.
Aurcana is focused on securing financing the put the RV mine back into production.
On Thursday January 7, the company said it has arranged a non-brokered private placement offering of up to 15 million units at $1.00 per unit, subject to approvals, with the lead order of $5 million coming from Palisades Goldcorp Ltd.
Each until comprises of one common share and one full common share purchase warrant, with each warrant good to buy one common share at $1.25 for 36 months. Net proceeds will also be used for working capital and general administrative expenses, including potential opportunities to advance its wholly-owned Shafter silver project in Presidio County, Texas.
In June 2018, Aurcana said the restart plan for the RV mine requires approximately US$36.8 million of initial capital. The mine is expected to produce 18 million payable silver equivalent ounces at an AISC of US$11.01/oz over a 6.4-year mine life. That estimate is based on defined mineral reserves of 575,000 short tons at a silver equivalent grade of 39.9 oz/ton (1,264 g/t).
The restart plan initially focuses on higher grade material, with production of 3.1 million ounces annually or a total of 15.5 million payable ounces.