Eric Sprott invests US$25 million in Continental Gold

Eric Sprott invests US$25 million in Continental Gold

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Continental Gold Inc. [CNL-TSX; CGOF-OTCQX] has announced a US$25 million strategic investment by Canadian billionaire gold bug Eric Sprott.

The company said Sprott has agreed to purchase 10.6 million Continental common shares at $3.10 per share via a non-brokered private placement.  Proceeds of the private placement will be used for general working capital and corporate purposes, the company said in a June 24, 2019 press release.

News of Sprott’s participation came as Continental announced the closing on Tuesday June 25 of a previously announced US$100 million gold and silver streaming transaction with Triple Flag Mining Finance Bermuda Ltd.

Continental Gold shares reacted by advancing 0.27% or $0.01 to $3.69 on volume of just over 1.0 million. The shares are currently trading in a 52-week range of $1.76 and $3.98.

The gold and silver stream is part of a US$175 million financing package that will be used in part to fund the advancement of Continental’s Buritica Project in Colombia.

A 19.9%-owned affiliate of Newmont Mining Corp. [NEM-NYSE], Continental Gold is an advanced-stage exploration and development company with an extensive portfolio of wholly-owned gold projects in Colombia.

The 75,023-hectare Buritica property is Continental’s flagship asset. It contains several known areas of high-grade gold and silver mineralization, of base metal carbonate-style variably overprinted by texturally and chemically distinctive high-grade mineralization.

Mineral reserves on the property currently stand at 3.7 million ounces of gold, grading 8.4 g/t and 10.7 million ounces of silver, grading 243 g/t.

That material is expected to support an average annual production rate in the first five years of 282,000 ounces of gold at a life-of-mine at an all-in sustaining and construction cost of US$604 an ounce.

Production is scheduled to commence in early 2020, the company has said.

According to a February 2016 feasibility study, initial capital costs are pegged at US$389.2 million. Total project costs were estimated at between US$475 million and US$515 million.

In a January 28, 2019 press release, Continental said an updated mineral resource estimate for the project is progressing well and ahead of schedule.

The project remains on schedule for construction completion and first gold pour in the first half of 2020, the company said. Ramp-up to commercial production is anticipated approximately six months thereafter.

Key terms of the Gold and silver stream are as follows:

  • A US$100 million subordinated secured 2.1% gold and 100% silver stream on the Buritica Project, where payable silver is deemed to be 1.84 ounces of payable silver for each ounce of payable gold.
  • Continuing payments of 10% and 5% of the spot price of gold and silver, respectively.
  • Full buyback option, on or before December 31, 2021 of the entire gold stream for US$80 million, less any gold stream net cash flows received at the time of the buyback.
  • Funding of the stream was in one lump sum payment.

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